The reimposition of restrictions due to the rise in Covid cases is expected to impact demand for automobiles, especially passenger vehicles and two-wheelers, according to rating agency Acuite. "The domestic sales recorded a contraction of 7 percent YoY during December 2021 driven by a persistent global shortage of semiconductors and a longer waiting period for many models," the rating agency said.

On a sequential basis, sales declined marginally, highlighting weakness in demand. The shortage of semiconductors may continue to disrupt passenger vehicle production and despatches over the next few months. Acuite said it expects a recovery in sales in the near term for two-wheelers due to the seasonal rise in farm incomes. However, the fresh rise in Covid cases triggered by the emergence of a new variant Omicron across the country may delay the revival.

For commercial vehicles, it is bullish as infrastructure creation and construction activities are gaining momentum in the core sectors. Outlook for the CV segment is positive for the medium term. (IANS/ MBI)

(Keywords: covid, automobile, vehicles, two wheelers, sales, omicron, curbs)