Speed breakers such as the third
COVID-19 wave triggered via the spread of the Omicron variant in India as well
as rising commodity prices might decelerate the automobile industry's recovery.
India's automobile industry expects a
continuation of healthy demand along with the easing of semiconductor supply
issues during the upcoming year. However, rising commodity costs have driven up
automobile prices. Similarly, the semiconductor shortage has extended the
waiting period along with escalated prices. At present, semiconductors play a
critical part in the production of internal combustion engines. They are an
integral part of all kinds of sensors and controls in any vehicle.
According to Tanu Sharma, Director
Ratings at Brickwork Ratings, passenger vehicles revenue growth estimates of
BWR may be revised downwards to 15% for 2022 in the backdrop of more severe
semiconductor chip shortages impacting deliveries and muted festive season
sales. He said that, due to rising commodity prices, and rising fuel prices,
vehicle price hikes will be inevitable and pose a challenge of the high cost of
ownership to buyers in the medium term.
Sridhar V., Partner, Grant Thornton
Bharat LLP said that, the auto sector looks at 2022 with optimism despite
several challenges faced by it in the form of chip shortage, Omicron, price
increase of input materials. The kickstart of the PLI scheme by the government
with clear directional indicators supported by measures under FAME, introduction of
scrappage policy, uptick in demand, positive sentiments and overall economic
growth indicators should strengthen the optimism. Chip shortage is expected to
ease out in the near term to keep pace with the demand expectations. He added
that 2022 is expected to be a year of awakening for the industry.
Source: ET Auto.com