Auto sales may dip by up to 25% in FY21, sharpest decline in two decades: Report

The auto industry is reeling under the pressure of the coronavirus crisis.As per an Ind-Ra report, the two-wheeler segment is expected to rebound faster while the decline in the medium and heavy commercial vehicles segment is likely to be the steepest during 2020-21.
By : PTI
| Updated on: 09 Jun 2020, 17:55 PM
Monthly sales volume may not return to the pre-Covid levels before mid-2021-22, Ind-Ra said. (Representational photo) (PTI)
Monthly sales volume may not return to the pre-Covid levels before mid-2021-22, Ind-Ra said. (Representational photo) (PTI)
Monthly sales volume may not return to the pre-Covid levels before mid-2021-22, Ind-Ra said. (Representational photo) (PTI)
Monthly sales volume may not return to the pre-Covid levels before mid-2021-22, Ind-Ra said. (Representational photo)

The automobile sales may decline by up to 25 per cent in this financial year as compared to 2019-20 due to a complete washout in April and minuscule sales last month, according to rating agency Ind-Ra.

The decline (excluding in tractors) would be the steepest in the last two decades, much higher than that recorded during the global recession in 2008-09, and is likely to push industry volumes to the 2011-12 levels, Ind-Ra said in a statement.

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The two-wheeler segment is expected to rebound faster, followed by passenger vehicles (PVs), while the decline in medium and heavy commercial vehicles (MHCV) is likely to be the steepest during 2020-21, it added.

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(Also read: India's automakers warn of up to 45% sales drop as economy slumps amid pandemic)

The rating agency expects two-wheeler sales to decline by 20-22 per cent, PV by 22-26 per cent, light commercial vehicle (LCV) by 26-30 per cent and MHCV by 35-45 per cent year-on-year in 2020-21.

Also, monthly sales volume may not return to the pre-Covid levels before mid-2021-22, Ind-Ra said.

"Volumes could increase by a high-single to a low double-digit rate in FY22, on account of a pent-up demand; however, it is subject to an improvement in industrial production activities, favourable regulatory changes, increase in consumption levels and a macro economic recovery," it added.

(Also read: Indian auto industry faces another year of double-digit sales decline: CRISIL)

Ind-Ra noted that the rural sector is likely to drive sales growth in two-wheeler and tractor segments.

The strong rabi crop harvest in 2019-20, an expectation of normal monsoon this year and a good kharif harvest forecast, coupled with government incentives and less exposure to lockdown related economic hardships, will boost rural income, it noted.

(Also read: China's monthly car sales rise by about 2% for the first time since June 2019)

"Hence, the decline in tractor sales volume is likely to be limited at 10-12 per cent year- on-year in 2020-21," Ind-Ra said.

Exports could come under pressure while overall industry revenue is expected to decline by 17-20 per cent year-on-year in the current fiscal, it said.

First Published Date: 09 Jun 2020, 17:55 PM IST
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