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India's growth in terms of Automobile sales

 India's growth in terms of Automobile sales





Hello readers,

India Car sales growth story

Car sales growth numbers we considering as reflection of  growth story of Indian household and economy. As we looked over numbers there is no great story.

2006 Car sales- 1.31 Million units

2020 Car sales- 2.43 Million units

Average annual growth rate was only 5.22%

As we look car sales growth as economy's growth then we not grow in last 10 years or slightly grow. Our consideration of car sales growth is direct reflection of growth in lifestyle of citizens, we may wrong also for this consideration. 




As we take base year 2012/2013 to compare growth in Auto sales then result is there is zero or near zero growth in 2021.

Below are car sales numbers year-wise (Million units):

2011- 2.5
2013- 2.7
2015- 2.6
2017- 3.0
2019- 3.1
2021- 2.71

As compare to Brazil which which having similar numbers of car sales like India in Emerging market class. So If we compare both country's stock index then we reach to conclusion India's overall stock index is over-valued. But many of you can say this decline in number is due to pandemic. Actually pre-pandemic picture for automobile industry was not good. Below are statistic of pre-pandemic time.



But thing is global car market also showing similar trend. As we saw 10 years long consolidation in car sales we may going for breakout record break car sales in upcoming years. The reason is high salaried IT professionals and boom in IT recruitment in recent time and along with high returns from stock market in recent boom. India's Auto index may out perform overall index as below chart indicates.


Another possibility-

As analysing anything we have to check possibilities through 360 degree. So we are going to check another possibility if above mention good picture fail to become reality.
As India have critical taxation system and have very high tax on luxurious commodity like automobile and reduction in purchasing power of citizens due to pandemic, availability of public transport like Metro & Mono-rails in Tier 1 cities ongoing projects and higher inflation peoples may avoid to buy cars. India witness growth in sales of premium cars (BMW, AUDI, etc) but other hand witness of  de-growth in overall car sales. If auto index slip below 10300 then more de-growth can be seen in car sales.

As our mantra 'Hope for the best but prepare for the worst'. We are looking auto index very bullish if sustain over 12230 and ruthless short for below 10300. As per current and past date we maintaining our bearishness on sector until Auto index not sustaining above 12230 along with car sales number growth  for 3 consecutive quarters.
   


Mayur Jagtap

Investment Consultant.



For regular and daily small update 

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