‘Festivals, pent-up demand to lift auto sales 15% in FY22’
Festive season sales and pent-up demand along with new launches are expected to push automobile dealers' volumes up by 10-15% in FY22, even as they see a patchy recovery this fiscal, according to a survey by CRISIL.
However, a possible third wave of COVID-19, spurt in fuel prices and supply constraints of original equipment manufacturers (OEMs) are seen among factors that could slow the sector down, CRISIL said on Monday.
Also, the performance of the automobile dealers varies sharply from region to region with the dealerships in north India being impacted the most, it said.
"Dealers of two-wheelers, passenger vehicles and commercial vehicles expect sales to increase 10-15% this fiscal on a low base of last fiscal, driven by new model launches, pent-up demand, and festive season sales," CRISIL said.
The survey, carried over 123 dealers of two-wheelers, and passenger and commercial vehicles with a fair mix across regions and OEMs, was aimed at gauging dealer sentiment and expectations and drawing a comparison with the findings of the poll conducted previous year's poll, it said.
"Last fiscal did see a demand uptick during the festival season, but it did not sustain. Two-wheeler dealers were the most impacted. This fiscal, too, sales across segments are yet to reach prepandemic 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," said Says Bhushan Parekh, Director, CRISIL.
Similar to the last fiscal, regional performance is expected to show sharp variation, the survey revealed. While most passenger and commercial vehicle dealers expect sales to improve across regions, 44% of passenger vehicle dealers in the north and 40% of commercial vehicle dealers in the south expect a decline.