Icra arm launches service tool to forecast automobile demand

The services are based on a quantitative model which incorporates inputs that impact demand for automobiles in India

Mumbai: Icra Management Consulting Services Ltd (IMaCS), the consulting arm of rating agency Icra Ltd, has launched a new service that offers a segment-wise quarterly vehicle demand forecast in India for the subsequent four quarters, the company said in a statement on Tuesday.

Referred to as Automobile Demand Outlook, the services are based on a quantitative model which incorporates inputs that impact demand for automobiles in India, gathered from primary and secondary research, to forecast future demand.

It seeks a variety of inputs such as sales patterns, inventory levels, model launches, network expansion plans, discount schemes, and also trends in consumer preferences, availability and rates of financing and intensity of competition from various stakeholders. These inputs are then assimilated and analysed along with quantitative parameters such as GDP (gross domestic product) and its components, IIP (Index of Industrial Production), interest rates which form macro-economic parameters, vehicle sales, fuel prices, credit disbursal and substitution effect to forecast future demand for the next four quarters.

“The demand for automobiles in India tends to be cyclical, as the demand is affected by macroeconomic conditions, business cycles and household spending cycles, based on outlook and sentiments," said R. Raghuttama Rao, managing director, IMaCS. “The demand for automobiles, he added, is also subject to seasonality depending on factors such as monsoon and festivals."

This dual impact of the combination of cyclicality and seasonality on demand for automotive vehicles poses a significant challenge to auto makers, component manufacturers, raw material suppliers, vehicle financiers, financial investors and other stakeholders who track the output of the automotive sector from the perspectives of procurement, production planning, sales, or financing.

“The absence of a robust prediction of demand for vehicles across different segments imposes a heavy cost on various entities in terms of higher inventories, lost sales, and eventually inefficient use of capital, and this is where IMaCS AuDeO will offer valuable insights to varied stakeholders," said Rao.

IMaCS AuDeO seeks to address this specific need of the automotive sector and help stakeholders gain an insight into the various dimensions that shape the demand for vehicles in India. IMaCS’ coverage would include all automobile segments and also provide the historical data and analysis on the automotive sector in India.