India's auto production may accelerate to 4-year high in FY'23

India's automobile production is expected to touch a four-year high of 26.50 million units (MU) this fiscal, as per SIAM data maintained with SteelMint.

The data reveals that y-o-y, India is likely to see a 16% increase in the current year as against 22.9 MU last year.

The expected increase is based on the premise that the semi-conductor issue which has been plaguing the auto industry this past few years would be more sorted with Indian players setting up such units. International Semiconductor Consortium's proposed $3-billion chip facility in Karnataka may start soon as part of the country's drive to become a large semiconductor hub. Gujarat may see a $20-billion chip facility being set up by Taiwan's Foxconn and India's Vedanta Group. Tatas have also entered the chip space.

The pent-up demand of 2022 thus may spill over into the current year.

This likely increase, if it does happen, will cross the post-Covid first wave's level of 26.40 million units recorded in 2020.

Domestic consumption in 2023 is also expected to rise by a considerable 27% to 21.9 MU compared to 17.30 last calendar.

However, export volumes are likely to fall over 10% possibly because of the pressure on auto makers to satiate domestic demand.

Consumption dips in FY21
The data also reveals that, in FY21, domestic consumption actually dropped 6% y-o-y amid concerns over higher interest rates, increase in long-term insurance premium and inflated fuel prices.

Off-take in entry-level two-wheelers and entry level passenger vehicles has been of concern especially as rural demand did not pick up as expected.

Auto production last fiscal remained almost flat at 22.90 million units in FY'22 as against 22.70 MU in FY21. This was mainly on account of the scarcity in semi-conductors, which resulted in long queues for delivery.

Exports, meanwhile, rose over 36% to 5.60 MU in comparison to 4.1 MU in FY21.