ICICI Direct: Auto OEMs - Seminal Year For Industry Provides Interesting Insights

ICICI Direct Report

FY20 was eventful for the Indian auto industry largely dominated by degrowth in volumes tracking muted consumer sentiment, switchover to BS-VI regime, thrust on electrification, impressive product launches in resilient utility vehicle segment including new foreign original equipment manufacturers (OEMs).

Total industry volumes de-grew 14.8% YoY to 2.63 crore units (domestic down 18% to 2.16 crore units, exports up 3% to 47.66 lakh units), making it the worst yearly performance in the past decade.

The decline was broad-based, with two-wheeler, passenger vehicle, three-wheeler down 14.4% (2.09 crore units), 14.8% (to 34.52 lakh units), 10.2% (to 11.39 lakh units), respectively.

Commercial vehicles fared worst, down 29.7% YoY to 7.78 lakh units.

However, amid all the gloom, the engineering and production prowess of the industry (along with its chain) shone brightly as it successfully completed the world’s fastest switchover to Euro 6 equivalent emission norms i.e. BS-VI as per schedule.

Much of the post festive period was focused on the transition, with the entire ecosystem estimated to have spent approximately Rs 70,000 crore towards the technological leap.

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