Carmakers record robust recovery in second half of FY2021

Carmakers – passenger vehicles and two-wheelers and parts suppliers have recorded a robust recovery in volumes and financials in the second half of FY2021. This comes after reporting unprecedented losses in the first two quarters when operations came to an abrupt halt due to COVID-19 pandemic lockdown measures.

Industry experts and analysts believe the third quarter was one of the best in the last two decades as retail sales of vehicles, especially of passenger vehicles, reached almost FY19 levels during the festival period. They said that demand after the festive season also did not contract significantly as the waiting period on some of the popular products is more than five months due to high demand and shortage of parts.

Automakers, as per Mint, like Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Tata Motors Ltd and others took two months to return to normal production schedule. Vehicle production, in October, reached record levels for leading manufacturers like Maruti, Hyundai, Hero Bajaj and others.

Moreover, retail demand for passenger vehicles also witnessed an increase by double digits during the Navratri and Diwali festivals. Despite slowdown in domestic demand for entry level motorcycles after October, manufacturers like Bajaj Auto and TVS Motor Co. are expected to report robust recovery in earnings due to gradual improvement in exports.

Analysts of ICICI securities said that the auto industry continued to benefit from relatively healthy demand trends in the post-festive months, with a sharp sequential jump in the commercial vehicle space being a particular highlight. “Broad-based general positivity stayed intact as other segments – two-wheelers, passenger vehicles and tractors also performed well.”

They observed that growth in topline of listed automakers and ancillaries in the fourth quarter is expected to be robust in year-on-year terms amid double digit volume growth, BS-VI price hikes and base effect – COVID impacted Q4FY20.

Also Read: India needs to grow at faster pace to make up for contraction of 8%: IMF Official

Furthermore, ratings firm ICRA said passenger vehicle industry is expected to post an impressive growth of 22% to 25% for FY2022, after a 2% to 4% decline in FY2021. In the beginning of FY21, Society of Indian Automobile Manufacturers (SIAM) expected sales to decline more than 20% across segments.