Automobile Demand Resurfaces Despite Dip in Recent Sales

Automobile sales were stagnant during COVID-19, and the industry hit the brakes in the early months of the pandemic.
Automobile Demand Resurfaces Despite Dip in Recent Sales

What’s Happening?

Automobile sales are catching up after the worst-known pandemic that the world has ever seen. The big cheer in the masses came due to the marriage season that was stalled during the pandemic. As soon as the economy opened fully, the demand returned, and the sales of cars, two-wheelers (2W), trucks etc., surged.

Recently, a strong marriage season has elevated the 2W sales. Nomura expects 10% growth in sales, with improving month-on-month volumes from the salaried segment. Passenger vehicles (PVs) may also witness healthy demand due to personal mobility and replacement options. Nomura expects a 6% growth in sales for PVs. CNG vehicles have been receiving more demand in the PV segment after new car launches and a rise in fuel prices. On the other hand, commercial vehicles have also been seeing an uptrend. Analysts expect single-digit growth in sales from Tata Motors (4%), Eicher Motors (3%) and Ashok Leyland (4%).

Should This Concern You?

Recovery in the economic activity and rising consumer demand have helped automobile makers to register double-digit growth. However, the Russia-Ukraine war, global semiconductor shortage and supply chain disruptions have recently affected the industry. Hence, customers are witnessing long waiting periods.

What Lies Ahead?

Revival in private consumption and normal monsoons this year could rub off some of the heat from the automakers. Tractors and 2Ws could benefit in the rural areas due to these factors. Overall, the sentiment in the auto retail industry remains healthy even if there’s a dip in sales in the near term.

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