Entry-level car buyers deferring purchase as Covid hits income sentiment: Report
Customers looking to buy entry-level cars or those looking to upgrade their existing models in the segment are putting off their decisions as the coronavirus pandemic has hit their income sentiment significantly, a report by ratings company Crisil stated. Meanwhile, sales of premium segment cars are expected to go up on the back of resilient income of affluent buyers, the report added.
The share of higher-priced two-wheelers is likely to remain around 40 per cent, the ratings agency noted. While supply-chain issues have disrupted production routines of vehicle manufacturers, counter-intuitively, models priced higher than the entry-level ones have continued to find buyers, the report said. For the record, cars priced above ₹10 lakh fall in the premium segment while two-wheelers costing ₹70,000 and above come in the higher prices category.
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During the last fiscal, premium segment cars sold five times faster than those with lower sticker prices, and notched up around 38 per cent year-on-year growth compared with around 7 per cent growth for the latter. Going forward, the ratings agency expects that the share of higher-priced cars will remain higher at around 30 per cent against 25 per cent during the last fiscal due to resilient incomes of affluent buyers and traction for new models.
Share of higher-priced two-wheelers will remain at around 40 per cent on the back of increasing consumer preference and the availability of more model choices.
While the income sentiment has been muted, there has also been a 15-20 per cent cumulative increase in the sticker price of lower-end cars over the past four fiscals due to increased stringency of safety regulations and the transition to BS 6 emission norms. With this, consumer preference has been gradually shifting from low-priced models to similarly-priced utility vehicles.
(with inputs from PTI)