INCREASE IN DEARNESS ALLOWANCE MAY SUPPORT VEHICLE SALES IN UPCOMING FESTIVE SEASON
News:
As per media sources, the central government has announced a hike in dearness allowances (from 34% to 38% of basic salary) for all central government employees (~48 lakh) and pensioners (~69 lakh) with effect from July 1, 2022.
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Average increase in annual salary for employees comes to ~Rs 13,750 while that for pensioners comes to Rs 9,100. Higher disposable income at the hand of beneficiaries could spur vehicle sales. However, given the quantum of absolute increase vs. the vehicle pricing we believe it could benefit the 2-W space more than the PV segment. It is marginally positive for 2-W players in our coverage viz. Hero MotoCorp and Bajaj Auto.
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