PV industry to post 22% to 25% growth in FY2022: Report

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The passenger vehicle (PV) industry is expected to report growth of 22% to 25% for the current fiscal year, according to a report by ICRA. The new forecast comes against the backdrop of a 2%-4% degrowth in FY2021.

The growth will be on a lower base of Q1 FY2021, primarily due to the industry slowdown and the pandemic impact. In addition to the lower base, expected pick-up in economic activity, improved consumer sentiments besides resilient rural income sentiments (less impacted by pandemic), healthy crop cycles, and several government initiatives will propel growth, states the report.

The shift towards personal mobility from public transport amid the coronavirus pandemic will also help the sector.

According to the report, the utility vehicles segment is likely to post impressive growth and will outperform the rest of the industry.

“The V-shaped economic recovery has boosted consumer sentiments from lows of June’21 quarter even though it still remains lower than previous (2019) levels. Consumer sentiments are one of the key indicators for non-discretionary purchases like cars and luxury goods. Demand has remained strong post the festive seasons as both retail and wholesale dispatches witnessed recovery. The industry clocked the best-ever volume during H2 FY2021, primarily driven by inventory restocking and pent-up demand. Also, as demand sentiments improved, discounts offered during the lean phase eased substantially. The industry’s outlook continues to remain stable,” ICRA vice-president Ashish Madani said

However, the report highlighted that semi-conductor shortage will remain a key challenge in the first quarter of the current fiscal as the automotive industry accounts for 12% of the global semiconductor demand. The report also pointed out that India’s dependency on overseas suppliers for semi-conductor is likely to continue over the next 3-5 years.