The automobile sector grew 12–14%, driven by three sub-segments: commercial vehicles, passenger vehicles, and two-wheelers, according to a report by CRISIL.
The growth was steered by a 20-25% pick-up in passenger vehicles due to healthy demand sentiment, supported by new model launches, supply-chain improvement and more variety in the product portfolio. The demand situation also gave elbow room for automakers to take multiple price hikes.
Tractors remained sluggish, though, following an erratic monsoon, a decline in rabi crop profitability and higher channel inventory.
Automobile makers’ margin is estimated to have improved on-year due to increase in capacity utilisation with higher volume offtake.
Sehul Bhatt, Associate Director- Research, CRISIL Market Intelligence and Analytics said, “Corporate India is expected to continue to benefit from easing input costs this fiscal which will offer further impetus to volume growth. Prices of key commodities such as crude oil and steel products have eased around 10%, while
aluminium prices have fallen 13% so far. Power and freight costs have also come down. This, coupled with volume growth in the domestic market, will support operating profitability in the near term.”