The global automobile industry was in shambles in the last couple of years due to various reasons but is it now a good time to invest in auto stocks?
This video will inform you about all the facets of the automobile industry before you decide to buy auto stocks. The last couple of years have been painful for the automobile industry, not just in India, but everywhere across the globe. The prime reason for this was the pandemic and the subsequent reasons emerged from the aftermath of it. Let us take a look at the crucial factors you need to know about before making a sound decision.
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Should You Buy Auto Stocks?
The video neatly captures almost all the facets related to the automobile industry in India. Firstly, the last few years were slow because production was hampered due to the lockdowns and the demand was also reduced due to a lack of liquidity among the common people. After those issues were resolved, to some extent, the supply chain issues crippled the industry. In addition to that, the semi-conductor chip shortage resulted in delays in production and deliveries of new vehicles even though the demand was back. This has resulted in massive backlogs for carmakers and two-wheeler manufacturers.
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The auto ancillaries required to supply parts and components to the auto giants have shown a run-up in the past few months because the demand and production are in full swing again. However, the market is making a paradigm shift in terms of electrification. Mahindra and Tata Motors have already revealed their plans to manufacture their EVs for the mass market within a few years. The prices of EVs and batteries are likely to go down as the demand increases and the technology becomes more accessible. This is a positive sign for the stakeholders.
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Finally, the government is clear about its intentions of pushing the alternative powertrains. This includes CNG, Hybrid and Electric cars. This would make India less dependent on crude oil and natural resources which will only boost the economy. However, there are investments required to develop the EV infrastructure, as well as battery technology to make sure that the range anxiety is eliminated. Only after achieving that can one expect a complete mass adoption of the EVs. However, the market trends are never fixed and it would still take a long time before the entire ecosystem has been set up around EVs. These could be the critical challenges in the growth story of the auto sector in India too. Therefore, make sure to learn about all these aspects before making a bet on the industry.
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