Outlook for domestic automobile industry has been revised from “Negative” to “Improving” by credit rating agency India Ratings and Research. The agency has attributed the positive change of outlook to the faster than expected revival in sales of passenger vehicles and two-wheelers in last six months.
In the period, sales picked up as a result of improving economic activity and shift towards private transport to avoid the Covid-19 infection.
The ratings firm expects auto volumes to rebound at 16-20 per cent in FY22 after recording an estimated decline of 14-18 per cent in FY21, according to a Mint report.
“Continued preference for personal mobility and demand across the urban and rural markets would be positive for passenger vehicles (PVs) and two-wheelers (2Ws). PV and 2W sales could grow by 18-22 per cent y-o-y and 16-20 per cent, respectively, in FY22. The lower growth in 2Ws than PVs could be because of their increased cost of ownership,” said analysts of Indian Ratings in a note.
“Commercial vehicles (CVs) could record high double-digit growth of 25-30 per cent y-o-y in FY22, aided by an uptick in industrial production, increased infrastructure/construction activities and a low base owing to the slowdown over FY20-FY21," added the analysts of Indian Ratings. The note further said India Ratings expects limited rating movements in the sector in FY22 and has thus maintained a "Stable" rating outlook.
