Better Days: Auto Sales will improve, says ZyFin Research

There are weather forecasts, poll forecasts, etc., but now there is one more – Vehicle Purchase Sentiment Index or in simpler words the forecast for vehicle sales. There is nothing sentimental about it though… Okay, may be a little bit. ZyFin Research has come out with an index which is basically a measure of people’s ‘willingness’ to purchase vehicles within a specific period of time, which is six months in this context.

ZyFin Research

The index is based on a monthly survey of 4,000 consumers in 18 cities across India, representing urban consumers. In September 2014, the index increased by 2.5 points to 17.5 representing a moderate increment in consumer willingness to purchase both two- and four-wheelers. This signifies that a larger section of people, as compared to August 2014, are planning to purchase a new two-wheeler or car within the next six months.

Key Highlights of the ZyFin Vehicle Purchase Sentiment Index for September 2014:

  • The score of 17.5 in September 2014 is an improvement to last month’s 15.0. It denotes an increased willingness to spend, which in turn would translate into better passenger vehicle sales over the next six months, the bulk of which would take place during the festive season.
  • Consumer opinion varies significantly across cities. Tier-wise, the metro and Tier-II cities show a markedly higher willingness to purchase vehicles than consumers in Tier-I. The index improved to 22.8 in September 2014 from 17.6 in August 2014 for metro cities and to 20.3 from 18.5 in Tier-II cities. However, the score for Tier-I cities is just 8.0 in September 2014, down from the 8.9 of the previous month.
  • Of the 18 cities surveyed, Mumbai, Guwahati, Mangalore, Hyderabad, and Indore have the strongest willingness to purchase vehicles.

It’s to be noted that a score above 50 reflects optimism, while below 50 is an indication of pessimism. Therefore, according to Debopam Chaudhuri, Chief Economist, ZyFin Research, the increased index in September reflects ‘recovering willingness to spend but the low score still indicates a lot of pessimism. He also adds that it would take some more time for auto sales to reach the healthy level of 2009-2010. That being said, the number will get better in the ongoing festive season.

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