India’s automobile retail sales are expected to show year-on-year growth only after April or in the first quarter of FY2022, said President of Federation of Automobile Dealers Associations (FADA) Vinkesh Gulati to local media. Retail sales are expected to grow on a month-on month basis from January onwards.
The year 2020 was challenging for India’s auto sector amid the spread of COVID-19 pandemic and the resulting lockdowns lowering production as well as sales. Gulati ruled out a year-on-year growth in the March quarter of FY2021. Sales in March quarter last year were robust as buyers sought to benefit ahead of the expiry of BS-IV vehicle registrations in March 2020. But a low base in Q1 FY2021 due to disruption caused by the lockdowns could show sales growth in April 2021, although real growth can be seen only if sales numbers exceed FY2018-2019 figures.
New vehicle registrations in India increased by 29.32pc to 18,27,990 units in November from October but dropped by 19.29pc from the prior year amid festive season. However, the same sales numbers are unlikely to repeat in the next few months despite year-end schemes.
Indian auto sector is also struggling with disruptions in the global automotive supply chain. Parts’ shortage including short supply of imported chips has impacted production. The recent surge in raw material prices is also a cause of concern for some automakers.
Auto components
The slow recovery in auto sector has boosted demand for auto components across vehicle segments. Original equipment manufacturers (OEMs) in India has reported uptick in demand since September, according to India-based rating agency ICRA, which has revised its outlook for auto components sector to stable from negative in December.
OEMs form 56pc to the auto components sector, followed by aftermarket components which contribute 18pc. Higher price of raw materials, especially metals and rubber, have hurt auto components makers on the cost front. ICRA expects OEMs to hike product prices from January to offset rise in raw material costs. The agency expects the Indian auto component makers revenues to increase by 16-18pc in FY2022 on increased components per vehicle, low-base and higher margins.