Ratings agency ICRA has said that Passenger vehicle industry's FY21 volumes are expected to witness a 22-25 per cent decline. It said the industry segment's fortunes are tied with the GDP growth rates and overall consumer sentiments which are currently at historic lows; this recessionary environment has resulted in purchase deferrals.
It mentioned while the industry was hit hard in Q1 FY2021; most PV and 2W OEMs started operating at pre-Covid level capacity utilisation during Sep-2020 (inventory re-stocking at dealership also supported wholesale dispatched during Sept'20) which is a positive. It also expects the PV industry volume to witness strong double-digit growth in FY2022.
It stated this will be after two consecutive years of negative growth at (-17.9 per cent) in FY2020 and (-22 to -25 per cent) in FY2021. The fall in demand is also being reflected in capacity utilisation which is likely to dip below 45 per cent in FY2021, from 50-55 per cent in FY2020. On the positive side, it noted that industry's long-term drivers are intact but compared to the Chinese and other key global markets, the domestic market is witnessing a slower paced recovery.