Russia-Ukraine crisis can accelerate supply side issues: FADA
The auto sector which was grappling with chip shortage crisis, now faces a surge in input costs due to the Russia-Ukraine tensions. In an interview to CNBC-TV18, Vinkesh Gulati, President of Federation of Automobile Dealers Association (FADA) said that the Russia-Ukraine crisis is likely to accelerate the supply side issues for the auto sector. He said high petrol and diesel prices are also impacting the rural demand.
The auto sector which was grappling with chip shortage crisis, now faces a surge in input costs due to the Russia-Ukraine tensions.
According to CLSA, entry-level two=wheelers and passenger vehicles are expected to be impacted the most if raw material cost pressure does persists going forward. They say Hero MotoCorp and Maruti operate in price sensitive customer segments and that could be a key concern to watch out for.
In an interview to CNBC-TV18, Vinkesh Gulati, President of Federation of Automobile Dealers Association (FADA) said that the Russia-Ukraine crisis is likely to accelerate the supply side issues for the auto sector.
"The auto sector was already grappling with supply chain issues in the car segment because of the semiconductor shortage and the current Russia Ukraine issues will add up to the issue of semiconductor manufacturing. So I am not hopeful about easing of the semiconductor issue in the near future."
He said high petrol and diesel prices are also impacting the rural demand.
"The demand of two wheelers is not that great as the rural economy is not yet back post-COVID. Also the oil price going up is a fear to the market because whenever the fuel price hike happens the customer sentiment and the demand goes down."
He added that government's focus on electric two wheelers is also impacting ICE vehicle sales.
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