New Delhi: High prices of automobiles are likely to persist at elevated levels even during 2022, said Grant Thornton Bharat in a report.
Lately, increasing cost of commodities in India has resulted in record-high prices for new and used vehicles in the country.
It is expected that these high prices are likely to remain as such in the next year as well and may not reinstate until 2023.”
Besides, the report cited other challenges for the sector such as semiconductor crunch which has aggravated problems for auto manufacturers.
As far as semiconductor shortage is concerned, domestic manufacturing has turned out to be a key solution.
To rely on domestic manufacturing to fulfil semiconductor needs, the country may have to wait before chips are manufactured here. For now, the country’s journey in the semiconductor sector is more likely to start with assembly, testing, marking, and packaging (ATMP) and specialty fabs.
Besides, in context to the efforts made by the government to become a self-reliant economy, the report pointed out that Indian automobile and manufacturing sector is expected to boost India’s FDI for the current year on the back of production-linked incentive (PLI) scheme.
The scheme is designed to incentivise domestic manufacturing and thereby, aimed at increasing exports.
Moreover, India being the sixth-largest economy in the world is characterised by an exponential consumer base, making it desirable to potential investors where India’s cost base is a great advantage.
With the help of all such factors, India can also become a centre for auto design and engineering services.
Meanwhile, German premier carmaker Volkswagen is expected to double its pre-owned car sales this year to 20,000 units, amid a shift in customer preference towards the used vehicles, according to a top company executive.
Volkswagen entered the used car market in 2012 with the launch of its first Das Welt auto showroom.
In June last year, soon after the pandemic hit the country last year, the carmaker launched Das WeltAuto 3.0, the brand’s digital window to facilitate buying and selling of used cars through the DWA website.
‘In the past almost two years, the one clear shift in customer preference I see is that customers are going for additional cars. That’s driven by the need for individual mobility. So, people who can afford to buy a car again are more likely to buy an additional car,’ Volkswagen Passenger Cars India Brand Director Ashish Gupta told PTI in an interaction.
The challenge that is coming is in new buyers coming into the market and that is where the need for mobility is, again and again, driving the demand, which is now shifting to pre-owned cars, Gupta said.
He added, ‘In this segment also, we have a strong presence with our Das Welt Auto brand. Last year, we sold close to 10,000 pre-owned cars. This year, we are on track to sell 20,000. So, that’s the kind of uptick we see,’ he said.
According to a study by Frost & Sullivan, commissioned by Volkswagen earlier this year, the pre-owned car market in India is expected to cross around 4-4.5 million cars by 2025, which will be almost 1.5-2 times the new car market, he said.