The last two years are a roller coaster for the automotive sector that faced not one but multiple hurdles during the amount and an unfortunate turn of events that further impeded recovery.

Fastest BS6 transition

India implemented BS6 norms from April 1, 2020, just three years after bringing in BS4 emission standards to scale back pollution. This made India the fastest country to successfully adopt and implement BS6 norms.

The automotive industry went through its own struggles to realize this speedy transition, including more use of precious metals like platinum group metals (PGM), higher electronic content and new technology to chop the tailpipe emissions.

This entailed a price hike of as high as 20 percent for two-wheelers and 3-4 percent for passenger vehicles—reasonably significant inflation that affected demand within the short term.

After a successful transition to BS6 things were looking up but the coronavirus outbreak led to a nationwide lockdown from late March 2020, shuttering factories. one among the foremost stringent lockdowns within the world at that point took a toll on the economy, especially the lower and middle classes, further affecting demand.

India announced a series of measures, amounting to a around Rs 20 lakh crore, to prop up the economy ravaged by the outbreak. This led to a swifter than expected recovery, with passenger vehicle and two-wheeler segments reporting a 15 percent and seven percent YoY average growth for Q2/Q3FY21.

This too, unfortunately, didn’t last long. The second COVID wave was furious, taking an enormous toll on life, overwhelming India’s medical infrastructure and resulting in a series of lockdowns.

The global recovery, however, was strong then were commodities. While India struggled with the second wave, the worldwide economy marched ahead, resulting in a pointy rebound in commodity prices.

Steel and aluminium prices nearly doubled from March 2020, while rhodium was up 3 times as global demand for PGM increased thanks to stringent emission norms. This started hurting margins of Indian original equipment makers (OEMs) who were already up against weaker demand, resulting in another round of price hikes.

Chip shortage, the ultimate blow

As the second wave has ebbed, vaccination has gained pace and therefore the economy is reopening. Pockets of growth are visible in passenger vehicles, premium motorcycles and even the commercial vehicle segment, perhaps one among the worst0hit within the auto segment, is predicted to select up also .

However, the auto world, like other sectors of the economy, is now grappling with a shortage of semi-conductors, which has hit production, especially of PVs where the waiting period is now up to four months.

The shortage is that the results of disruption of the availability chain, pent-up demand and a fireplace at one among the worldwide semiconductor manufacturers.

While the near-term outlook is hazy with the world grappling with multiple issues, it’s reasonable to conclude that this situation is as bad because it can get.

Typically, automotive demand is deferred instead of destroyed. Given how significantly aged this fleet of mobility is, a confident revival of growth can cause a robust catch-up in sales led by pent-up demand. India still features a strong runway to grow with ample penetration growth opportunities.