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Complete Normalization In Vehicle Finance Sector Expected

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Broking firm Motilal Oswal Financial Services expects complete normalization in vehicle finance sector by the first half of calendar year 2021.

According to a report by by the firm, the credit costs across vehicle finance (VF) players is expected to be 1.7-4.4% in FY21 and gradually revert to run-rate levels over FY22-23.

"By Aug-Sep'20, sales in most product categories picked up to prior year levels. PV sales for the industry improved significantly to nearly 100% of prior year levels in 2Q from sub-30% levels in 1QFY21.

Similarly, two-wheeler and tractor sales surpassed prior year levels in Aug'20 and Sep'20. Two-wheelers and passenger vehicle segments have benefitted from the preference towards personal mobility solutions. Tractors have benefited from a healthy monsoon in 2019, coupled with a strong Rabi crop," the broking firm has stated.

Complete Normalization In Vehicle Finance Sector Expected
 

According to its report M&HCV segment continued to be a laggard.

"This segment was under pressure even prior to the COVID-19 pandemic. The channel checks suggest that used CVs are witnessing strong demand given the price hikes in new CVs.

The checks also suggest that retail festive sales were in-line with prior trends in 2Ws and tractors and improved sequentially in the case of passenger vehicles," Motilal Oswal has stated in its report.

Read more about: vehicle motilal oswal
Story first published: Tuesday, November 24, 2020, 11:33 [IST]
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