The adverse effect on auto sales will continue

Mumbai, Ta. 20 February 2020, Thursday

The adverse impact on auto sales will continue due to the sluggish economy and poor consumer sentiment, and the modest improvement seen due to the festive season in the December quarter is unlikely to survive. During the festive season, high sales of vehicles saw a modest increase in vehicle sales.

The economic growth rate of the country was slow to 5.4 per cent in the financial year 6-8 and the current fiscal is expected to fall to 5 years at the end of the year with five per cent. Poor financing options to reduce consumption demand and purchase of high value equipment such as vehicles have impacted GDP growth.

The economic downturn and consumer durables will continue to impact vehicle sales, according to a report by research firm Fitch. However, the report does not shed light on when sales volumes will rise or if the downturn will continue.

The sale of vehicles is also being affected due to BS-1 standards being implemented in the country from 1st April. If the coronavirus effect affects the supply of auto parts from China, it is likely to result in the production of vehicles.

India's auto industry meets 5% of its demand from China. The industry has also indicated that the supply of goods from China will be difficult to convert from April 1 to BS-2 standard.