The second wave of the pandemic in India is likely to decelerate the recovery of the automotive industry, while the impact of the past few months has been severe, Indian rating agency ICRA said in a report on Friday, May 21.
The report said that, in the second wave, infections have had a deeper and wider penetration, with the outlook for various segments being revised downwards.
The original equipment manufacturing (OEMs) sector is under pressure, but so are auto-ancillaries to an extent. Lockdowns and curfews, although deemed of utmost importance to possibly controlling the spread of the pandemic, have compelled factories to shut and dealerships to once again shutter down, the report said.
While there is no respite in sight, ICRA said that demand might remain very subdued in view of significant medical spends and the eroding purchasing power of consumers, which will impact discretionary purchases like vehicles, at least in the near term.
Forecasting that the two-wheeler segment will be hit the hardest, ICRA forecasts that, contrary to earlier expectations of the segment growing at 16-18 percent during the fiscal year 2021-22, it is now expected to register growth in the range of 10-12 percent during the fiscal year.
For the passenger car segment, ICRA has revised its growth forecast for the current fiscal year from 22-25 percent to 17-20 percent.