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ICRA forecasts domestic auto sales to remain flat in fiscal year 22

Low demand for two-wheelers was one of the main reasons affecting overall auto sales in India in FY22.

Via Automatic table HT
Update on:
January 23, 2022, 04:01 ONLY

Several factors have affected motorcycle sales in India in the 22nd financial year.
Several factors have affected motorcycle sales in India in the 22nd financial year.

Research agency ICRA claims domestic auto sales in India will be flat for the current financial year. The agency also stated that slow auto sales in fiscal year 22 were due to a drop in demand for two-wheelers and supply chain constraints. This will be the third year in a row that auto sales in the Indian auto market will slow.

(Also read: Mahindra expects auto sales to pick up as supply constraints ease)

The two-wheeler industry saw a challenging Fy22 year, recording a drop in demand across categories, driven by rising costs of ownership due to rising fuel prices as well as increased prices by manufacturers due to increased overhead costs. into increase. Demand from rural and semi-urban areas, which account for a significant proportion of motorcycle sales, remained depressed in FY22. Not only the 200 cc and above segment, but also the low-end segment also witnessed demand declines.

The forecast claims that the two-wheeler segment could record a sales decline of up to 6% in FY22 compared to previous estimates that expected growth of up to 14%. The passenger vehicle segment will also record growth of up to 12% YoY in the current fiscal compared to the agency’s previous estimate of up to 18%.

ICRA also thinks that domestic auto sales are likely to remain flat or decline at 4% YoY compared to the previous expectation of 12-15% YoY growth. This change from the previous estimate is mainly due to the increased demand for two-wheelers, which account for more than 80% of total industry output.

In addition, the decrease in disposable income of ordinary car consumers, weak demand from rural areas, as well as the postponement of the reopening of colleges and offices amid the second wave of the Covid-19 pandemic. Tuesday is also affecting the drop in demand.

There are other factors that also play a part in this declining sales picture. These include lost output due to semiconductor shortages, particularly in the passenger car segment.

ICRA also stated that Q4 of the current fiscal year is likely to equal or better than the previous quarter, due to concerns about chip shortages and good earnings. However, it is likely to be offset by dwindling consumer sentiment during the third covid wave.

Date of first publication: January 23, 2022, 04:01 PM IST


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