A Case for rise in private vehicle usage 🚘

It has been more than 18 months since the outbreak of covid fully and the new variants of corona keep coming up, thereby disrupting businesses on a regular basis causing huge amount of fluctuation in demand and supply.

The sectors that first came to my mind when the news of a new variant was the effect that it is going to have on automotive sector as this is one sector which has a direct impact on other sectors like Tourism and Hospitality industry which accounts for 39 million jobs (8% of total workforce approximately in our country).

I was sceptical initially about the growth in private vehicles considering the fact that the growth was slowest ever in last five years.

As if the structural downturn was not enough, The pandemic and its continuing after effects are creating an absolute roller coaster for the sector from last 2 years.

Some of the main reasons that can be attributed to this downturn are :

  • Fastest BS6 Transition : India implemented BS6 norms from April 1, 2020, just three years after bringing in BS4 emission standards to reduce pollution which resulted in price hike of as high as 20 percent for two-wheelers and 3-4 percent for passenger vehicles thereby putting a dent on demand for the short term.

  • Covid in 2020 , 2nd Wave in 2021 - Creating huge supply demand mismatching creating huge chaos.

  • Semi conductor chip shortage - This resulted in supply chain disruption affecting the production

  • Pollution Worries in many cities causing temporary headwinds.

  • Improved Public transportation facilities in Metro Cities like Metro trains which also affected some demand.

> What lies ahead for the Private Vehicle Space going forward?

In my opinion, The following factors may positively impact growth in private vehicle space going forward (6 months) :

  • Work from Office trend is slowly fading and the Back to office theme is slowly emerging in various cities across companies

  • Hesitancy of people to travel in public transportation temporarily due to fresh covid variants may also result in private vehicle usage.

  • EVs are rapidly growing across the segments which not only addresses the concerns on the environment front but also will address the high fuel costs problem which our economy constantly faces.

  • Semi Conductor issue easing going forward which should decrease the costs of the production and ultimately the vehicles.


    With most of the headwinds behind, this might be the time to focus on auto sector.

    Tell me your views on what other factors can positively or negatively affect the sector going forward.

    Disclaimer : No recommendation, only for discussion and study purpose.