Categories: Economy

Demand for passenger vehicle, two wheelers expected to increase

Demand finally rising in the automobile sector

Despite price hikes, the passenger vehicle and two wheeler segments are experiencing sustainable demand recovery, India Ratings and Research (Ind-Ra) said in a report.

Notably, the domestic automobile industry&#39;s sales volumes (excluding CVs) grew 10 per cent YoY in February 2021, recording positive growth for the seventh consecutive month.

Segment wise, PV and 2W sales volumes were up 18 per cent and 10 per cent YoY, respectively, in February 2021.

However, segments such as 3Ws and CVs are still catching up.

&quot;Ind-Ra opines steady growth of PVs and 2Ws over December 2020 to February 2021 — after the festive season ended in November 2020 — despite the price hikes taken by original equipment manufacturers (OEMs) suggests a sustainable demand recovery for the sector amid improving macroeconomic fundamentals,&quot; the report said.

&quot;Exports volumes also continued the growth trend in February 2021, up 9 per cent YoY, mainly led by 17 per cent YoY growth in 2W exports.&quot;

According to the report, PVs continue to lead the domestic revival, benefitting from the increased consumer preference for personal mobility.

Besides, the domestic PV market continues to see an increasing shift towards utility vehicles (UVs).

&quot;A sustained high demand for UVs, sales volume up 45 per cent YoY in February 2021, translated into 2 per cent YoY growth in UV sales volume during 11MFY21.&quot;

Furthermore, passenger cars also continued to see positive growth in February 2021, led by 8 per cent YoY growth in the sales volume of compact cars.

&quot;2Ws, albeit growing 10 per cent YoY in February 2021, are impacted more by the increased cost of ownership amid price hikes by OEMs coupled with historically high fuel prices in India.&quot;

&quot;This is apparent in the 3 per cent YoY decline in sales volume of the more price –sensitive entry — level motorcycles under 110cc. Overall, motorcycles and scooters sales grew 11 per cent and 10 per cent YoY, respectively in February 2021.&quot;

In addition, the report said that retail sales in February 2021 were a mixed bag — PVs grew 11 per cent YoY but 2Ws and CVs declined 16 per cent and 30 per cent YoY.

&quot;Although retail sales have, for the most part, lagged behind wholesale dispatches in 11MFY21, a sustained uptick in demand across most segments over December 2020-February 2021 suggests that consumer sentiments are improving.&quot;

&quot;While concerns over the near-term supply-side constraints remain, barring a major global crisis, the domestic auto industry&#39;s demand revival is likely to continue into FY22.&quot;