Thought Leadership

Auto Track Q2 FY 21

We are pleased to announce the release of our quarterly publication Auto Track for Q2 FY 21.

The future of the Indian automobile industry is promising. While the automotive value chain has been disrupted, it has also created new opportunities to establish a stronger industry. This is a good time to learn from the crisis and rethink the dynamic changes in demand and supply to keep the industry moving.

Here are a few key highlights from the latest publication:

Industry witnesses recovery due to pent-up demand

Major OEMs witnessed a sharp recovery in sales in July 2020, led by strong rural recovery and demand from first-time buyers and pent-up demand due to the lockdown. The production also has picked up substantially since July 2020 as OEMs began replenishing dealer stocks for the festival season.

Post-unlock: The Indian automobile industry

The demand recovery has largely been driven by the preference of a personal vehicle over public transport. High disposable income due to a good harvest in the rural market is another reason that sales are picking up. Post-COVID-19, consumers are likely to return to pre-COVID-19 habits; walking, biking and micro-mobility might potentially become more popular.

Harnessing the export potential of the industry

India has significant opportunities to expand exports in categories where it has a competitive advantage and low share in global exports. Thus, localisation in the automobile industry would translate into demand and economies of scale for the manufacturers with reduced imports, expanded exports, and induced R&D.

Megatrends leading to a connected ecosystem

Innovation is accelerating across the industry, bringing in disruptive advances in how vehicles are developed, built, sold and used. Industry 4.0 strategies are streamlining global value chains. Connected vehicle technologies are providing a whole new range of services. Breakthroughs in artificial intelligence (AI) mean autonomous vehicles are visible on the horizon.

Review of loan structuring implementation

As per the recommendations released by the RBI on 7 September 2020 for the one-time restructuring of stressed loans, as a measure of short-term liquidity, the banks need to ignore the current ratio while restructuring loans due to the adverse impact on vehicle production and sales in the automobile industry.