Automakers’ profit margins are estimated to have improved year-on-year due to increased capacity utilization due to increased sales volumes.
According to a report by CRISIL, the automotive sector grew by 12-14% led by three sub-segments: commercial vehicles, passenger vehicles and two-wheelers.
Growth was driven by a 20-25% increase in passenger vehicles, driven by healthy demand sentiment supported by new model launches, supply chain improvements and a diversified product portfolio. Demand conditions also created room for automakers to raise prices multiple times.
However, tractors remained weak due to unstable monsoon, declining profitability of rabi crops and rising channel stocks.
Automakers’ profit margins are estimated to have improved year-on-year due to increased capacity utilization due to increased sales volumes.
Sehul Bhatt, Associate Director, Research, CRISIL Market Intelligence and Analytics, said, “Indian companies are expected to continue to benefit from input cost relief in the current fiscal, which will provide further impetus to volume growth. Probably.” Prices of major commodities such as crude oil and steel products fell by about 10%.
Aluminum prices have fallen 13% so far. Electricity charges and transportation costs have also fallen. This, coupled with increased sales volumes in the domestic market, will support operating margins in the short term. ”