Commercial automobile gross sales in India might take longer to get well than anticipated regardless of bettering macro-economic indicators, in response to India Ratings and Research (Ind-Ra).
The mild industrial autos (LCVs) phase has began to get well as they supply final mile connectivity and due to elevated e-commerce actions however medium and heavy industrial automobile (MHCV) gross sales are unlikely to get well earlier than the fourth quarter of 2021-22, it mentioned.
The rankings company reiterated that MHCV gross sales might decline by 35-45 per cent year-on-year (y-o-y) in FY21, although the decline in LCV gross sales is prone to be contained inside 20-25 per cent.
“In FY22, the industry could see sales growth in double digits, especially due to the low base of FY20-FY21,” it mentioned in an announcement.
Stating that there’s extra system capability and lowered decrease fleet utilisation, Ind-Ra mentioned throughout April-September 2020, CV gross sales volumes declined 56 per cent y-o-y, with a steeper decline of 76 per cent recorded in MHCVs.
Citing Federation of Automobile Dealers Associations (FADA) information, it mentioned that CV retail gross sales grew sequentially in November 2020 (up 13 per cent from October). However, it stays far behind the typical month-to-month gross sales recorded throughout FY19-FY20. Sales quantity in November was down 31 per cent y-o-y.
“The MHCV sub-segment, which was already grappling with the excess capacity created in the system post implementation of the revised axle load norms in July 2018 and peak sales achieved during FY18-FY19, suffered significantly with the onset of COVID-19 as economic activities reached an all-time low coupled with capex deferrals across sectors,” the rankings company mentioned.
The newest macro-economic indicators present a gradual enchancment in financial actions, nonetheless, it is just prone to inch up the present fleet utilisation. While the incremental demand for autos would wish a sharper restoration, it added.
The CV business stays closely reliant on industrial actions, which have progressively improved, as indicated by 3.6 per cent y-o-y progress in Index of Industrial Production for October 2020.
Besides, the output of eight core industries in October 2020 additionally improved sequentially, although it dropped 2.5 per cent y-o-y, it mentioned.
“Moreover, expecting a better demand and improving capacity utilisation, manufacturing companies are revisiting their capex plans which were deferred at the beginning of FY21, thus necessitating the higher movement of goods and improved existing fleet utilisation. However, since scaling up of capex could take time, the benefits of the same are likely to accrue in FY22,” it mentioned.
Ind-Ra additionally mentioned some uncertainty continues as a part of the traction in manufacturing actions might be attributed to the pageant demand whereas the complete restoration might nonetheless take longer.
“Moreover, certain sectors such as real estate, hotel, aviation are still depressed which may contain the overall recovery to an extent. Furthermore, as a second wave of COVID-19 outbreak impacts certain key exporting nations, exports could be a bit gloomy in the near term,” it added.
