Not only Corona related, but also other problems affect the auto sector

Mumbai, Ta. Saturday 22 August 2020

The auto sector has not only corona related problems, but other problems as well. Due to various problems, demand in the auto sector in India is expected to fall by more than 50 per cent this year, according to global ratings agency Fitch.

According to a report released by Fitch Ratings, demand, which had stalled during the previous lockdown, was seen in July, which led to a slight improvement in sales. But there are many other problems facing the auto sector, not just demand. The auto sector faces many challenges against domestic demand. At present, demand is expected to fall by more than 50 per cent this year. Moreover, if Corona becomes uncontrollable, there is a strong possibility that even more demand will fall.

Corona's earlier implementation of BS9 standards on pollution in the auto sector from April 30 had dampened the sentiments of auto companies as well as consumers. In addition, the lockdown imposed by Coro's strike in March added to the difficulties facing the auto sector. This unfavorable situation affected the demand of first time car buyers. On the other hand, the demand for upgraders has also been negatively affected.

Demand for commercial vehicles has also been adversely affected by the slowdown in private and public investment. Sales of medium and heavy commercial vehicles in particular have been severely affected.

On the other hand, the problem of financing for buying vehicles has also increased. Lending for vehicles by NBFCs and banks has slowed down due to the adverse conditions caused by Corona.

It is to be noted that in the commercial vehicle segment, they have become more cautious in giving loans to the weaker borrowers as they have given loans earlier. On the other hand, the lockdown has adversely affected people's income and has also had an adverse effect on the vehicle loan segment.

However, in the midst of all these adversities, the sales volume of passenger vehicles increased by 3 per cent during July last year as compared to June. Volume in the two-wheeler increased by 3%. However, on an annual basis, car volume fell by 4 per cent in July and two-wheelers by 15 per cent.