PV demand to witness moderate growth over next few quarters: Report

The demand for passenger vehicles (PVs) will witness moderate growth over the next few quarters with complete unlocking of the economy and revival of demand, particularly in the rural areas, according to Acuite Ratings & Research.

However, it said the volumes may remain partly constrained due to the continuing supply challenges in semiconductors and also the sharp increase in retail fuel prices.

The domestic PV sales registered a healthy growth of 14.7 per cent year-on-year in FY22 despite the supply challenges in semiconductors that led to longer waiting periods and production cuts for certain models, Acuite said in a statement.

The growth print was also supported by a low base factor, given the protracted lockdown in FY21, it added.

“Acuite believes that the demand for PVs will witness a moderate growth over the next few quarters with complete unlocking of the economy and revival of demand, particularly in the rural areas,” it said.

For two-wheelers, the rating agency said the demand in India has continued to be plagued by the prolonged Covid pandemic and its impact on the informal sector and small businesses.

“While we expect demand to make a comeback in FY23 due to unlocking of the economy and the expectation of healthy agricultural output, the timeframe for the same is uncertain and may also be impacted by the sharply rising retail fuel prices,” it added.

In the commercial vehicles (CV) segment, Acuite said domestic sales registered a year-on-year growth of 25.2 per cent in FY22. It was mainly on account of the recovery witnessed in demand during the second half of the fiscal, led by a revival in industrial activity, pickup in trade volumes and increased public investments in infrastructure despite the bouts of the Covid pandemic.

“The improvement in the demand of CVs will continue going ahead with the unlocking of the economy and the government’s focus towards development of infrastructure and expansion of National Highways in the country,” Acuite Ratings & Research Ltd Chief Analytical Officer Suman Chowdhury said.

However, Chowdhury said, the sharp rise in retail fuel prices due to the current geo-political scenario will put pressure on transporters’ margins and may impact the purchase of new vehicles in the near term.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor