24.2 C
California
Thursday, October 22, 2020

Passenger Vehicle Industry’s FY21 Volumes Expected to See 22-25% Dip: ICRA


New Delhi: Passenger vehicle industry’s FY21 volumes are expected to witness a 22-25 per cent decline, ratings agency ICRA said on Wednesday. Also Read – India’s Public Debt, Stable Since 1991, To Jump to 90% Due to COVID-19 Pandemic: IMF

“The industry segment’s fortunes are tied with the GDP growth rates and overall consumer sentiments which are currently at historic lows; this recessionary environment has resulted in purchase deferrals,” ICRA said in a research note. Also Read – India’s GDP to Contract by 10.5% in FY21 Before Bouncing Back Next Year: Fitch Ratings

“While the industry was hit hard in Q1 FY2021; most PV and 2W OEMs started operating at pre-Covid level capacity utilisation during Sep-2020 (inventory re-stocking at dealership also supported wholesale dispatched during Sept’20) which is a positive.” Also Read – COVID-19 Crisis: India’s GDP Falls by Record 23% in June Against 3.1% Growth in Previous Quarter

ICRA, in its research note, also expects the PV industry volume to witness strong double-digit growth in FY2022.

“This will be after two consecutive years of negative growth at (-17.9 per cent) in FY2020 and (-22 to -25 per cent) in FY2021. The fall in demand is also being reflected in capacity utilisation which is likely to dip below 45 per cent in FY2021, from 50-55 per cent in FY2020,” the note said.

“We expect capex cut by 35-40 per cent during FY2021-FY2022, and incremental investments will be primarily towards new product development and platform improvisation.”

On the positive side, ICRA noted that industry’s long-term drivers are intact but compared to the Chinese and other key global markets, the domestic market is witnessing a slower paced recovery.

Commenting on the expected PV trend, Ashish Modani, Vice President, ICRA, said: “There is an increased risk aversion in retail as well as wholesale financing, which is a deterrent. The rural market will be the key driver of volume in FY2021 which will benefit entry level cars and UV.”

“Buyers may opt for 2W or used cars to avoid public transport. The share of diesel vehicles is expected to decline below 40 per cent in UVs in the next two years and some manufacturers have already exited the diesel portfolio completely.”


Speak Your Mind

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Get in Touch

211FansLike
41FollowersFollow
41FollowersFollow

Recommend for You

Air India Announces Additional Flights to London January 1, Booking Begins | Details Here

International Flights: National carrier Air India has announced additional flights...

WHO concerned about Europe’s coronavirus outbreak as ICU beds near capacity in some regions

A member of the medical staff treats a patient suffering from the coronavirus disease (COVID-19) at the Intensive Care Unit (ICU) of the Slany...

‘Out of control’: European leaders scramble to control the second wave, with a state of emergency and lockdowns

A nurse gets ready to enter a room to take care of a patient infected with Covid-19 at the intensive care unit of the...

Calls Grow For Feinstein To Resign As Top Democrat On Judiciary Committee After Barrett Hearings

Topline Calls are growing among many on the political left for Sen. Dianne Feinstein (D-Calif.) to relinquish her position as the top-ranking Democrat on...

AP Explains: The Promise Of 5G Wireless – Speed, Hype, Risk

FILE - In this Sept. 17, 2020 file photo, visitors wearing mask to protect from the coronavirus walk past a 5G sign at the...

Related Articles

Coronavirus hospitalizations grow in the Midwest amid climbing cases...

Growing coronavirus outbreaks across the American West and Midwest have started to take an...

Mavs’ Cuban, Doncic And Powell Donate $500,000 To Childcare...

DALLAS, TEXAS - MARCH 18: Dwight Powell #7 of...

The Academy Sets New Inclusion Standards For Oscar Eligibility

HOLLYWOOD, CA - FEBRUARY 09: Jin Won Han and...

KCON:TACT 2020 Fall Announces Details For Virtual K-Pop Festival

TOO performs at KCON:TACT 2020 Summer Courtesy...