ICRA cuts growth forecast for PV industry to 8-11% for FY22
On account of the ongoing semiconductor shortage the rating agency has downgraded growth forecast from 14-17% to 8-11%
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Chip crisis dents automakers
• Two-wheeler's volume to contract by 1-4%
• Automakers in PV segment lost 5 lakh units of production due to chip shortage
• Earnings loss for manufacturers could be around Rs 1,800-2,000 cr for the ongoing fiscal
• Electric mobility garnered Rs 20,000 cr in investment
New Delhi: Ratings agency ICRA on Wednesday revised downwards growth forecast for the domestic Passenger Vehicles (PV) industry to 8-11 per cent in the ongoing fiscal from the earlier estimate of 14-17 per cent on account of the ongoing semiconductor shortage.
Similarly, for the two-wheeler segment, it said the volumes are expected to contract by 1-4 per cent in FY2022 against an earlier prediction of 6-8 per cent growth as affordability and demand sentiments of target clientele was hit sharply by the second wave of Covid-19 pandemic. With around 5 lakh units of production lost by various automakers in the passenger vehicles segment due to the semiconductor shortage, ICRA said the earnings loss for the OEMs (Original Equipment Manufacturers) could be around Rs 1,800 crore to Rs 2,000 crore for the ongoing fiscal.
With electric mobility gaining traction, ICRA also said a total investment of around Rs 20,000 crore has been announced in the auto components and electric two-wheeler segments in India by various companies spread over the next three to seven years. Presenting some of the key trends witnessed in the Indian auto industry in a webinar, ICRA Ltd Vice President & Sector Head Rohan Kanwar Gupta said while electrification has been the buzzword, demand in the two-wheeler industry has been the most impacted by the pandemic.
While the demand was expected to recover, it hasn't happened for the two-wheeler segment as affordability and demand sentiments of target clientele was hit sharply by the second wave of Covid-19, he said. Elaborating the factors, he said reduced discretionary income due to job-losses, salary cuts and Covid-induced medical expenses, coupled with relentless increase in two-wheeler prices, record high petrol rates, uneven monsoons and delayed harvest, and moderation in financing availability, have significantly impacted the industry's prospects, especially in the entry segment.
On the other hand, he said demand for the passenger vehicle (PV) segment has remained robust, with a preference for personal mobility aiding healthy enquiries. However, Gupta said the segment has been the worst impacted by the semiconductor chip shortage issue, with wholesale dispatches of various OEMs being materially curtailed over the past few months. As a result, retail sales for the industry have also been impacted by low inventory across dealerships, leading to consumers postponing their purchases.
Consequently, ICRA said it has revised its estimates downwards for the domestic wholesale dispatches for the segment, expecting the segment "to grow by 8-11 per cent during FY2022, lower than the earlier estimate of 14-17 per cent on account of the ongoing semiconductor shortage".
