Auto industry may see double-digit growth in 2021

Last updated:

The auto industry is expected to see double-digit growth in 2021. The sector suffered a 15-20 per cent drop in sales after the COVID-19 outbreak disrupted the market everywhere in the country.

According to the experts, the industry may recover faster than expected recovery in economic activity. The number of those, who prefer personal mobility, has increased. This is likely to increase the sales of affordable cars and two-wheelers.

The sale of commercial vehicles is also likely to recover from the loss after government-funded infrastructure projects gain pace.

“While temporary disruptions will impact production and sales in FY21, demand is showing signs of sustenance, supported by rural cash flows, demand for personal mobility, and easy liquidity in the market. The industry has reduced expenses on all other cost heads in H1FY21, and a part of this benefit will be carried forward in coming quarters also,” according to credit rating agency Icra.

The president of the Federation of Automobile Dealer, Vinkesh Gulati, said the industry has been recovering rapidly since the COVID-19 induced lockdown was lifted.

“Lately, we have seen good pent-up demand in passenger vehicles and hopefully, it will stay as safer mobility and new launches this year will keep the demand going. While the industry will witness an overall decline of around 20-25% on a financial year basis, things will start looking better from April, aided by the lower base of last year,” Gulati said.

“The sentiment remains positive though there are concerns about availability of raw material and increase in commodity prices. As the unlock continues there will be more demand in the rural and urban markets. In FY22, vaccines for covid-19 will also be available which will help generate more demand. After two years, we are expecting recovery in business next year,” said Deepak Jain, president, Automotive Component Manufacturers Association.

SHARE