India’s PMI continues to maintain its 57-plus run while vehicle, motorcycle, and scooter sales are off to a strong start. India, the world’s largest producer of two-wheelers, sold more than 1.3 million motorcycles and scooters in February alone. February’s automobile sales increased 18% YOY, while a new government vehicle scrap policy could increase the country’s annual automobile sales by 107%. The quarterly manufacturing survey shows continued growth and momentum with average factory utilization as good as, or in some cases better than, pre-covid times. For more industry intel and other tidbits, read on.
February’s manufacturing PMI index was 57.5, a tad lower than the 57.7 in January. The services PMI grew to 55.3 in February from 52.8 in January, continuing the country’s economic activity growth momentum.
The Society of Indian Automobile Manufacturers (SIAM) published that the total vehicle sales in February increased YOY by 10%, to 1,735,584 units.
Car and other passenger vehicle sales in February increased 18% YOY to 281,380 units. For the month, Maruti-Suzuki saw an 8% YOY increase in sales and Hyundai Motors reported a YOY sales increase of 29%.
Motorcycle sales in February increased 11% YOY to 910,323 units. Scooter sales also increased 11% YOY to 464,744 units.
The Indian government announced the much-awaited Vehicle Scrap Policy for personal-use passenger vehicles more than 20 years old and commercial vehicles more than 15 years old. The owners will be offered a 4%-6% discount for a new car, provided they submit the necessary scrap certificate. The policy is likely to increase the country’s annual automobile sales to around $135 billion from the present $65 billion.
The Federation of Indian Chambers of Commerce & Industry’s (FICCI) quarterly manufacturing survey, which collects data from over 300 manufacturing companies across 12 different sectors, concluded that manufacturing gained additional momentum in Q1 of 2021. The investment outlook increased by 30% against an 18% increase in the previous quarter. The hiring outlook improved by 37% against 20% in the previous quarter.
Also reported by the FICCI was that the average capacity utilization across various sectors in Q4 2020 varied between 70% and 82%, which is comparable to, or in certain sectors better than, Q4 2019 in pre-COVID-19 times.
Growth assessments across various sectors for 2021 are projected to be strong for medical devices and technologies, chemical fertilizers, pharmaceuticals, textile machinery, electronics and electricals, capital goods, and metal and metal products. Growth is projected to be moderate for cement and ceramics, textiles, automotive, and leather and footwear. Lower growth is projected for paper products.
A few recently announced projects and investments:
Ola Electric is investing about $2 billion to set up the world’s largest electric two-wheeler factory in Tamil Nadu.
Volkswagen is planning to invest $1.1 billion to launch four new cars.
Mahindra Defence Systems secured an order worth over $150 million from the Ministry of Defense for the supply of 1,300 special light vehicles for the Indian army.
Bharat Dynamics signed a contract with the Ministry of Defense to supply Milan-2T anti-tank guided missiles worth $170 million.
Swaraj Tractors (Mahindra Group) is planning to set up a new tractor manufacturing plant in Punjab.
Bosch India is planning to spend around $120 million to upgrade their Bengaluru-based facility.
For more information, contact Arun Mahajan (AMahajan@AMTonline.org).