Passenger Vehicle Industry's FY21 Volumes Expected to See 22-25% Dip- ICRA

Business Standard Passenger vehicle industry's FY21 volumes expected to see 22-25% dip: ICRA

Passenger vehicle industry's FY21 volumes are expected to witness a 22-25% decline, ratings agency ICRA said on Wednesday.

Passenger vehicle industry's FY21 volumes are expected to witness a 22-25 per cent decline, ratings agency ICRA said on Wednesday.

"The industry segment's fortunes are tied with the GDP growth rates and overall consumer sentiments which are currently at historic lows; this recessionary environment has resulted in purchase deferrals," ICRA said in a research note.

"While the industry was hit hard in Q1 FY2021; most PV and 2W OEMs started operating at pre-Covid level capacity utilisation during Sep-2020 (inventory restocking at dealership also supported wholesale dispatched during Sept'20) which is a positive."

ICRA, in its research note, also expects the PV industry volume to witness strong double-digit growth in FY2022.

"This will be after two consecutive years of negative growth at (-17.9 per cent) in FY2020 and (-22 to -25 per cent) in FY2021. The fall in demand is also being reflected in capacity utilisation which is likely to dip below 45 per cent in FY2021, from 50-55 per cent in FY2020," the note said.

"We expect capex cut by 35-40 per cent during FY2021-FY2022, and incremental investments will be primarily towards new product development and platform improvisation."

On the positive side, ICRA noted that industry's long-term drivers are intact but compared to the Chinese and other key global markets, the domestic market is witnessing a slower paced recovery.