New Delhi [India], February 20 : The auto sector now eyes the upcoming marriage season and revival in government infrastructure projects, for boost in sales, especially for the two-wheelers and entry-level cars, says a report by InCred Research.
The report also noted that the demand for automobiles has faced some challenges after the festive season, with discounts being withdrawn at a slow pace. The industry is now closely watching two key factorsprice hikes and overall demand trendsto assess the future outlook.
It said "Rural demand growth was better than urban growth by 200-300bp for the quarter. All hopes are on the marriage season demand and a revival in government infrastructure projects".
This indicates that people in rural areas are showing relatively higher interest in purchasing vehicles compared to cities. However, the sector still needs strong triggers for a full recovery in demand.
The report also mentioned that weddings in India often lead to higher purchases of vehicles as gifts or for personal use, making this period crucial for automakers.
Another factor that could improve demand is a revival in government infrastructure projects. If such projects pick up pace, they could lead to higher income generation, particularly in rural areas, which would, in turn, support automobile sales.
While the industry is facing challenges, some factors could help demand recover shortly. Interest rates are easing, which means people will have to pay less on loans for vehicle purchases.
Additionally, recent income-tax cuts have improved disposable incomes, making it slightly easier for buyers to afford new vehicles.
On the international front, demand was stronger than expected for original equipment manufacturers (OEMs). However, auto component companies saw weaker demand in the third quarter of FY25. This trend is expected to continue in the near future.
The report added "International demand was stronger than expected in the case of OEMs while it was soft for auto component companies in 3QFY25. The trend is likely to sustain in the near future".
Overall, while the auto sector is still facing some uncertainty, the combination of lower interest rates, better rural demand, and the marriage season could provide the much-needed push for recovery in the coming months.
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