India
Ind-Ra has published the June 2021 edition of its credit news digest on India’s auto sector. The report highlights the trends in the sub-segments of the auto sector, including passenger vehicles (PVs), commercial vehicles (CVs) and two/three-wheelers (2W/3Ws), with a focus on sales volumes growth, market share movement, change in commodity prices and recent rating actions.
The lockdown relaxation in most parts of the country led to the reopening of automotive dealerships and the resumption of operations by original equipment manufacturers (OEMs). However, the June 2021 volumes remained much below historical peaks (35% below June 2019 levels). The PV segment resumed its outperformance compared to the industry on account of increasing preference for personal mobility by 119% YoY.
2Ws has been more impacted by the increased cost of ownership amid price hikes by OEMs coupled with historically high fuel prices in India and workplace and colleges remaining closed. 3Ws continued to drag with a 9% YoY decline due to reduced preference for shared mobility. The growth trend in exports volumes resumed in June, with increase by 82% YoY.
Retail sales also recovered in June 2021 – with PV and 2W volumes increasing 43% and 17% YoY, respectively. Inventory at the dealership levels for PVs increased to 30-35 days in June 2021. Ind-Ra believes that the increase was due to OEMs replenishing inventory with dealers in anticipation of a pent-up demand and supply chain issues on account of a shortage of semiconductors.
Tej Karan Singh, Senior Analyst, Ind-Ra stated that, the industry witnessed healthy growth on a sequential basis in June. He added that Ind-Ra expects the recovery in sales volumes to continue in July 2021, driven by the lockdown restriction being lifted in some more parts of the country and a steady decline in daily new covid cases.
Source: India Ratings & Research Press Release
Image Source: India Ratings & Research Press Release
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