Auto companies expect December quarterly results to be encouraging

Mumbai, Ta. 19 January 2021, Tuesday

Auto companies are likely to announce strong results in the third quarter of the current financial year, i.e. December, as a result of increase in sales volume of all segments in the auto industry and reduction in operating costs due to cost cutting measures.

The recovery in the auto industry is being supported by a resurgence of previously outstanding demand and a surge in demand for personal vehicles and a sharp recovery in the rural economy.

Sales of unloaded vehicles and tractors have maintained strong double-digit growth, which is expected to continue in the fourth quarter, according to a report by HDFC Securities.

The auto sector is also expected to benefit as the country's economy recovers from the effects of the coronavirus. However, sharp rise in prices of commodities like steel, copper and aluminum in the December quarter could put pressure on auto companies' margins, an analyst said.

Most auto companies have also modestly increased the price of their products so as not to adversely affect the margins in commodity prices.

Capacity utility in auto companies has increased and discounts have been declining as demand has increased, the report said. The auto industry has been in recession for the last two-and-a-half years due to the economic downturn and the Corona, which is now seeing a recovery.