material prices are stabilizing and price hikes would positively impact the
margins of automakers, according to Kumar Rakesh, senior automobile and technology
analyst at BNP Paribas India.
Motors Ltd ended 2021 on a high note. Its domestic passenger vehicle (PV) sales
rose by 50% in December from a year ago. Some analysts reckon the sequential
rise indicates an improvement in availability of semiconductor chips. As such,
the underlying demand for PVs appears robust, partly helped by the increased
need for personal mobility due to the covid-19 pandemic.
commercial vehicle (CV) segment continued its recovery in December. For
domestic two-wheelers and tractors, though, it was a bumpy road. Slow recovery
in the rural economy is one reason for the pain.
high base would continue to pose challenges for the tractor segment, at least
in the initial phases of the new year. Good progress of kharif procurement and
higher rabi sowing, may help improve the pace of recovery over the coming
from the two-wheeler segment are not particularly high. The rise in covid-19
cases and sharp price hikes in this segment have also weighed on demand.
demand for CVs is likely to gain traction due to increased infrastructure
activity supported by the government. Further, demand for PVs is on a solid
footing for now. Overall, swelling demand for personal mobility, progress in
the nascent EV (electric vehicle) industry, the threat from chip
shortage and Omicron will widely drive the automobile sector in 2022.
be sure, 2022 may well bring respite on some counts for Indian auto companies.
The semiconductor supply situation requires close monitoring, and 2022 may turn
out to be better on this front. Meanwhile, in 2022, the auto industry could
also see an accelerated transition to EVs.