ZyFin forecasts higher festival vehicle sales in metro, Tier 2 cities

ZyFin Research, a macro-analytics firm focused on the emerging markets, says the buying interest will be higher in metro and Tier 2 cities when compared to Tier 1 cities in India for the next six months.

In its latest report shared with Autocar Professional, ZyFin Research’s Vehicle Purchase Sentiment Index has registered a steady uptrend since bottoming out in April this year.

In September 2014, the index increased by 2.5 points to 17.5, with moderate upticks in consumer willingness to purchase both two- and four-wheelers. This signifies that a larger number of Indian consumers are planning to purchase a two- or four-wheeler within the next six months. Historically, the sentiment index has had a strong correlation with actual sales of passenger vehicles. With the festive season coinciding with the uptrend in market sentiment, auto sales are expected to be better this season as compared to 2012 or 2013.

The Vehicle Purchase Sentiment Index reflects plans to purchase vehicles over the next six months. It is based on a monthly survey of 4,000 consumers in 18 cities across India, representing urban consumers. A score above 50 reflects optimism, while below 50 is an indication of pessimism.

However, consumer opinion varies significantly across cities. Among the tiers, metro and Tier 2 cities show a markedly higher willingness to purchase vehicles than consumers in Tier 1 cities.

The index improved to 22.8 in September 2014 from 17.6 in the previous month for metro cities and to 20.3 from 18.5 in Tier 2 cities. However, the score for Tier 1 cities is just 8.0 in September 2014, having fallen from 8.9 in the previous month.

Of the 18 cities surveyed, Mumbai, Guwahati, Mangalore, Hyderabad and Indore have the strongest willingness to purchase vehicles.

Commenting on the ZyFin Vehicle Purchase Sentiment Index numbers for the month of September, Debopam Chaudhuri, chief economist, ZyFin Research, said: “Although the uptrend in Vehicle Purchase Sentiment Index suggests recovering willingness to spend, the low score still indicates a lot of pessimism. It would take some more time for auto sales to reach levels witnessed during 2009-10. However, for now, we can expect some moderate uptick in sales growth, especially during the festive season.”