What price hike? Cars and two-wheelers witnessing sustainable demand recovery
Despite the price hike at the beginning of the year and the increasing cost of auto fuels like petrol and diesel demands for the passenger vehicle and two-wheelers are undeterred. This trend is fuelling the sustainable demand recovery for both passenger vehicles and two-wheelers, claims a study by India Ratings and Research (Ind-Ra).
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The growing preference towards personal mobility mediums instead of using the public transport systems, in the light of the Coronavirus pandemic has been fueling this trend. The domestic auto industry sans the commercial vehicle segment has reported 10% YoY growth in February 2021, as compared to the same month a year ago. This resulted in positive growth for the seventh consecutive month.
The passenger vehicle sales volume has witnessed 18% in February 2021, as compared to the same month in 2020. The two-wheeler segment too registered 10% YoY growth last month. However, despite the demand recovery in the PV and 2W segments, the three-wheelers and commercial vehicles are still catching up.
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The research agency said that the steady growth in demand for passenger vehicles and two-wheelers over December 2020 to February 2021 after the festive season ended in November last year, despite the price hikes by the auto manufacturers suggests a sustainable demand recovery for the sector amid the improving macroeconomic fundamentals.
Not only the domestic sales volume, but the automakers have posted increased export volumes as well across the passenger vehicle and two-wheeler segments. In February 2021, the Indian auto industry posted 9% YoY growth in exports volume as compared to the same month a year ago. This was majorly led by the 17% YoY growth in two-wheeler exports, claims the study.
Another growing trend in the Indian auto market is that the PV segment is witnessing an increasing shift of focus towards utility vehicles. The introduction of new models with a wide range of facilities has fueled the growth by offering the customers a host of choices. In the recent past, the UV segment has seen launches like Tata Safari, Kia Sonet, Nissan Magnite, etc. The sustained high demand for utility vehicles has resulted in the category sales volume growth by 45% in February 2021, as compared to February 2020. Also, there was a 2% YoY growth in UV sales volume between the April-February period of FY21.