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Growth Outlook Dampens Across Auto Segments as Slowdown Bites - ICRA

Auto News - Published on Fri, 30 Aug 2019

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Credit rating agency ICRA said that the ongoing slowdown in the Indian automobile sector, which have continued from FY2019 and intensified in FY2020, coupled with poor sales performance in the first four months is likely to impact the industry's full year growth and performance. As per ICRA analysis, while the passenger vehicles is estimated to witness a decline in the range of 4-7 per cent, the commercial vehicle sector is to report a flat growth in financial year 2019-2020. It said “The EBIDTA margins will likely moderate for all major PV OEMs, due to negative operating leverage. However, cumulative revenues are estimated to decline marginally, as the decline in volumes will be largely offset by increasing realization (due to premiumization, regulatory impact on car prices – BS VI, safety norms etc).”

Mr Subrata Ray, Senior Group Vice President ICRA, said “In the short-term, much would depend on the meaningful demand recovery post monsoons, especially given the fact that many parts of the country have witnessed flooding. Agricultural output, revival in economic and industrial growth would be critical. It however remains to be seen how the auto demand recovers during the festive season and likely pre-buying in Q4 FY2020, in anticipation of post BS VI price hikes."

He further said the recent steps announced by the government is a positive for the sector adding that the liquidity support announced for the banking system and government spend on infrastructure can be a significant catalyst for the automotive industry.

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Posted By : Mohan Sharma on Fri, 30 Aug 2019
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