Putin bomb body blow to auto sector

Kharkhov in Ukraine after Russian bombing

Putin bomb body blow to auto sector

Neutral to negative outlook for virus-hit industry

Auto dealers’ body does not see any signs of early recovery

MUMBAI, Mar 5 (The CONNECT) – First t was COVID now the Russian raid on Ukraine.

The major blows from the Communist countries have hit the Indian auto industry hard.

With omicron passing away without much impact and supplies showing signs of recovery, it looked as if Indian Auto Industry was at the cusp of recovery until Russia invaded Ukraine, said Vinkesh Gulati, president of FADA (Federation of Auto Dealers Associations). “This will once again have ripple effects on the global automobile supply chain,” he said.

Russia is one of the largest producers of rare-earth metals especially Palladium, which is an essential metal for semi-conductors. Ukraine on the other hand is one of the biggest producers and exporter of Neon Gas, which is used in the manufacturing of semiconductors, Gulati pointed out and. “Due the ongoing war, we once again fear the shortage in semi-conductors which will create additional supply side issues for PVs (passenger vehicles),” he said.

He expressed the fear that with crude breaching US$ 110 mark, the government will not be able to hold prices of petroleum products for long. Post the state election results, oil marketing companies will increase fuel prices by at least Rs. 10-15. This will act as an obstacle for 2-wheeler sales, he said.

With educational institutions and offices now fully open and Gudi Padwa round the corner, there can be some increased interest in 2-wheeler as well as the Bus segment which has witnessed a long dry spell of almost 2 years.

“Indian Auto Industry during February continues to remain in red as total retails were down by -9.21% YoY and -20.65% when compared to February’20, a regular pre-covid month,” FADA said.

The 2-wheeler segment is showing no signs of recovery as Bharat continues to play spoil-sport. With cost of acquisition continuously going north, inquiry level remained weak. As corporates and educational institutions continued operating from home, urban demand also took a hit.

Even though the PV segment saw some launches and slight respite in supply due to better production, it was not enough to meet customer demand. Vehicle waiting period thus remains similar to what it was in last few months.

While commercial vehicles are not at similar levels when compared to pre-covid months, slight recovery on yearly basis was visible majorly due to low base effect. This coupled with increase in government’s infrastructure spending saw continued traction in HCV and Tipper segments. Fleet operators who were earlier being missed have slowly started purchasing vehicles, FADA said.

Recent News