Sales volume of passenger vehicles to fall by up to 25% in FY21: Crisil

Sales' volume in the Indian passenger vehicles' segment - including exports, is likely to fall by between 22% and 25% in fiscal 2021, according to ratings agency Crisil. The fall will be the second consecutive year of double-digit volume decline after a 15% decline in fiscal 2020.

File photo of a car dealership used for representational purpose. (REUTERS)
File photo of a car dealership used for representational purpose.

Crisil, in a press statement, informed that its analysis had shown total volume of sales would fall to a decadal low of 26.5 lakh units. This was based on assessment of eight makers of passenger vehicles who account for 80% of industry sales volume. "The eight PV makers had 50,000 crore of surplus liquidity as of March 2020, which will help them tide over these difficult times," said Aparna Kirubakaran, Associate Director at Crisil.

The report assumed a 60% fall in domestic dispatches in the first half of this fiscal, in line with staggered opening of dealerships from May 2020, followed by a 6% to 8% revival in balance half of the fiscal, primarily due to improved rural demand. Along with a 15% drop in export volumes, this would stand at around 22% to 25% fall in overall sale volume in fiscal 2021.

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Anuj Sethi, Senior Director at Crisil, is of the opinion that the road ahead is peppered with challenges for OEMs. "With muted income growth, discretionary spending will take a backseat this fiscal. Also, given increasing awareness about social distancing, consumers may reduce, if not avoid, travel by public, pooled and shared transport in the short term. However the benefit from change in commuting-pattern will only partly offset the steep downturn," he said.

Additionally, Crisil also observes that an increased preference for used cars and smaller passenger vehicles could be witnessed after a favourable jump towards SUVs over the past two to three years. "Small PVs and used vehicles will find favour owing to better affordability," said Sethi.

The report concluded that the extent of Covid pandemic, along with ability of the component supply chain and automotive dealerships to stabilize operations will remain key monitorables.

First Published Date: 12 Jun 2020, 14:12 PM IST
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