The Indian auto industry will record a negative growth rate in the range of eight to nine percent during the fiscal year 2019-20, according to the revised outlook for the industry by rating agency India Ratings and Research (Ind-Ra).
The rating agency has revised its forecast for the Indian auto industry from stable earlier to negative for the remaining months of the current fiscal year.
Although Ind-Ra has forecast a slight revival during the second half of the fiscal year with the industry recording flat to low single-digit positive growth riding on festival season sales, overall growth will continue to remain subdued for the full year.
During the first five months of the current fiscal year, the decrease in auto sales was 16 percent and was seen across all auto sub-segments. The sharp reduction in original equipment manufacturers’ dispatches was also partly owing to the industry taking measures to reduce inventories at the dealers’ end.
Ind-Ra has forecast that the second half of the fiscal year will be better than the first half as inventories will normalize after festival season sales during the October-November period of 2019. But a revival in commercial vehicle sales will take time and negative growth in this segment will continue during the second half of the current fiscal year, the rating agency forecast said.
The automotive industry covers about 10 percent of total steel consumption in India. Without support from the construction industry, which has been also weak recently, Indian steel producers will still be focusing on export sales and will cut production up to the end of the 2019 calendar year.