BackMoody's says India auto sales to drop 30% in calendar 2020
Moody’s has projected a 30% plunge in auto sales in western Europe and Russia, 35% in Brazil and Argentina, 25% in the US While leading vehicle makers have resumed operations in western European, dealerships in some countries remain closed
PremiumMUMBAI: Credit rating agency, Moody’s Investors Service, on Wednesday said automobile sales in India will fall 30% in calendar year 2020, as against a 20% decline globally. Moody's had earlier estimated a 14% fall in global sales volumes for 2020.
However, Moody’s said auto sales worldwide may improve during January-March of the current fiscal, recovering 11.5% in FY21 and that of India's would grow by 20%, albeit on low base of CY2020.
“We are cutting our auto sales forecast as the severity of the global recession becomes more apparent. Amid a sharp drop in economic activity in the wake of the coronavirus outbreak, we expect G-20 GDP to contract 4.0% in 2020, worsening from our previous forecast of a modest 0.5% contraction," the Moody’s report said.
Besides India, Moody’s has projected a 30% plunge in auto sales in western Europe and Russia, 35% in Brazil and Argentina, 25% in the US and Canada and about 15% in Japan this year.
Moody's said while leading vehicle manufacturers have resumed operations in western European markets, dealerships in some countries remain closed and demand may continue to be weak.
“What happens next will depend heavily on the extent of the government support, with buying incentives being discussed for as early as June in Germany and September in France," it said, adding that it expects the region to rise 17.5% in CY2021 off a low base.
Meanwhile, Moody's pointed out that expediting production in the US could be slowed down due to issues in supply from vendors in Mexico, which is seeing a prolonged shutdown.
Moody’s also estimated that China and South Korea would record a year-on-year drop of 10% and 6%, respectively, in auto sales.
“After plunging 42% during the first three months of CY2020 from year-earlier levels, Chinese auto sales climbed back to post a 4% yoy gain in April, which we believe signals a healthy rebound in demand," the report said.
“Following an improvement in sales growth during the second half of 2020, we expect Chinese auto unit sales to grow 2.5% in 2021," it added.
According to Moody’s, auto manufacturing along with aviation and oil and gas sectors are the most exposed to the credit shock caused by the virus-led deteriorating global economic activities.
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