Auto Sector Check – Price Hikes, Supply-Chain Woes Hurt Outlook: CareEdge

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We expect that consumer sentiments might get dampened owing to price hikes by original equipment manufacturers and fuel inflation. The Reserve Bank of India’s decision to increase the repo rate by 40 basis points will lead to more expensive auto loans and thus hurt demand further.

In addition, concerns regarding global supply chain constraints due to the lockdown in China and the Russia-Ukraine war also persist.

However, automobile sales in this fiscal year are expected to be supported by a normal monsoon forecast, good water reservoirs levels, increased Kharif sowing, ongoing marriage season, new launches, and continued support by the government in the agriculture sector and infrastructure spending.

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