Automobile dealers hope for 15% sales growth in FY2022, finds survey

Automobile dealers are expecting to witness patchy sales recovery this fiscal. The dealers of passenger vehicles, two-wheelers and commercial vehicles expect to see vehicle sales increasing 10-15% in the current fiscal, claims a survey by Crisil.

The sales growth is expected on the back of the low base of last fiscal, new model launches, pent up demand. The main growth driver will be the upcoming festive season.

Last year too, the festive season helped the industry to post a marginal sales recovery after the first wave shock of the pandemic. However, the sales recovery trajectory slumped after the festive season, due to the severe second wave of the Covid-19 pandemic.

Now, with another festive season round the corner, the automobile dealers are hoping for a better sales picture. However, factors such as an upcoming third wave, high price of motor fuels and increasing vehicle prices are likely to slow down the sales.

The study says that vehicle sales in India us yet to crawl back to FY2020 levels. It also points that the deal conversion cycle has doubled as consumers are deferring purchase decisions.

Commenting on the findings of the survey, Bhushan Parekh, Director, Crisil, said that in FY2021 there was a demand uptick during the festive season, but that didn't sustain. “Two-wheeler dealers were the most impacted. This fiscal, too, sales across segments are yet to reach pre-pandemic levels. Also, the deal conversion cycle has doubled, with customers deferring purchase decisions. While sentiment is positive among dealers, the risk of a third wave during the upcoming festive season is a key concern," he added.

Meanwhile, the study pointed to the severe disparity in regional sales growth. According to its findings, automobile dealers in the north Indian region have been the most impacted across segments. Around 44% of passenger vehicle dealers in the north and 40% of commercial vehicle dealers in the south expect a decline in sales.

Two-wheeler dealers on the other hand are optimistic about sales in FY2022. Dealers in the east and west expect higher sales, while 33% in the north and 20% in the south are not as hopeful.

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