NEW DELHI :
India’s automobile industry is headed for another year of double-digit sales decline this fiscal, given the extended lockdowns and sharp fall in customer affordability in an economy forecast to contract due to the coronavirus outbreak.
Overall sales volume are expected to fall to multi-year lows, with sales of passenger vehicles and commercial vehicles reaching fiscal 2010 levels, Crisil Research said on Thursday.
Sales of tractors and motorcycles would recover faster than other segments due to their exposure to the rural markets where demand is expected to recover faster than the urban markets, the research arm of rating agency Crisil said in a note.
Domestic passenger vehicle sales are expected to fall 24-26% this fiscal year. Commercial vehicle sales are also expected to decline 26-28% this year, it said.
Passenger vehicle sales in India had fallen 18% last fiscal with commercial vehicle sales falling 29%.
According to Hetal Gandhi, director, Crisil Research, automobile sales are running out of steam as the pandemic has severely impacted urban income sentiments.
“We assessed 26,000 companies that have a total employee cost of ₹7 lakh crore. It indicates that over 60% of this cost resides in companies that are expected to see a sharp reduction in revenue growth, and where employees are a meaningful cost head. This is expected to lead to higher risk of job losses or pay cuts," added Gandhi.
Besides the drop in affordability of buyers, the rapid spread of covid-19 in metros and tier one cities will also impact demand in the urban markets where most of the passenger vehicles are sold