Shamsher Dewan
Vice President, ICRA Ltd
Shamsher Dewan
Vice President, ICRA Ltd
Healthy farm sentiments may help kickstart demand recovery in auto segment
The domestic auto industry is facing numerous challenges due to the economic slowdown and lockdowns. Although sequential recovery is evident across all sub-segments, it remains to be seen how the demand momentum picks up in the festive season. The industry fortunes are linked to the GDP growth and the overall consumer sentiments, which are currently at historic lows, have resulted in purchase deferrals. So far, demand recovery has been supported by a buoyant rural demand, shift in the preference for mobility of personnel and inventory re-stockings at dealers. ICRA’s channel check suggests that retail as well as wholesale financing too is under pressure and delinquencies are on the rise in select segments, though the real trend is masked due to the moratorium opted for by the customers. Given the bleak demand, OEMs too are curtailing capex spends. However, tractors, entry-level motorcycles and cars and smaller LCVs are likely to do well as farm sentiments are expected to remain healthy.
