Filter Your Search

  • PRODUCTS
    • Accessories
    • Batteries
    • Body & Exterior parts
    • Brake Parts
    • Chassis & Suspension
    • Drive Transmission & Steering Parts
    • Electrical & Electronic
    • Engine Parts
    • Forgings & castings
    • Garage Equipments
    • Instruments
    • Interior Parts
    • Locks & Switches
    • Oil & Lubricants
    • Powertrain
    • Rubber & Plastic parts
    • Tyres
  • OEM
    • Ampere Vehicles
    • AMW
    • Ashok Leyland
    • Aston Martin
    • Atul Auto
    • Audi
    • Avan Motors India
    • Bajaj Auto
    • Bentley Motors Limited
    • BMW
    • Chrysler
    • Daimler
    • DSK
    • Ducati
    • Eicher
    • Escorts
    • Ferrari
    • Fiat
    • Force Motors
    • Ford
    • General Motors
    • Goenka Electric Motor Vehicles
    • Great Wall Motors
    • Harley-Davidson
    • Hero Electric
    • Hero Electric India
    • Hero MotoCorp
    • Hindustan Motors
    • HMSI
    • Honda
    • Hyundai
    • India Yamaha Motors
    • International Cars & Motors
    • Isuzu Motors
    • Jaguar Land Rover
    • JBM Group
    • JCB India
    • John Deere
    • Kawasaki
    • Kia Motors
    • Kinetic
    • KTM
    • Lamborghini
    • Lexus India
    • Lohia Auto
    • Mahindra
    • MAN Trucks India
    • Maruti
    • Maserati
    • Mazda
    • Mercedes-Benz
    • MG Motor
    • Mitsubishi
    • Nebula Automotive
    • New Holland
    • Nissan Motor India
    • Okinawa
    • Olectra- BYD
    • Piaggio
    • Polaris
    • Porsche
    • Premier
    • PSA Peugeot Citroen
    • Renault India Pvt Ltd
    • Rolls-Royce
    • Royal Enfield
    • Scania
    • Skoda
    • Sonalika
    • Suzuki Motorcycle
    • TAFE
    • Tata
    • Toyota
    • Triumph Motorcycles India
    • TVS
    • Twenty Two Motors
    • UM Lohia Two Wheelers Pvt Ltd
    • UM Motorcycles
    • VECV
    • Volkswagen
    • Volvo
    • Volvo Group India Pvt Ltd
  • NEWS
    • Associations and Bodies
    • Awards & Inaugurations
    • Commercial Vehicles
    • Conferences & conventions
    • Corporate Profiles
    • Dealer Meets
    • Electric & Hybrid vehicles
    • Exhibitions
    • Financial Results
    • M & A and Collaborations
    • Management Changes
    • Milestones
    • Miscellaneous News
    • New Launches
    • Policy & Economy
    • Races & Rallies
    • Retail Sales & Services
    • Surveys & Reports
    • Two & Three Wheelers
Archives

PVs get severe COVID jolt

04/08/2020 | Author: Autoguide | 0 Comments Back To Home   < Previous News   |   Next news >

FY2021 decline estimated at 22-25 pc: ICRA

The COVID-19 outbreak and the back-to-back lockdowns have severely impacted the domestic passenger vehicle (PV) industry, according to a latest report by rating agency ICRA. 
 
The passenger vehicles’ demand is now estimated to decline by 22 to 25 per cent in FY2021, as against earlier estimated volume decline of 10-12 pc post Lockdown 1.0, said an ICRA note. The expectation then was that normalcy would return by second week of May 2020. 
 
However, multiple lockdown extensions are having a direct bearing on economic environment and consumer sentiments. The rapid spread of COVID-19 across region and consequent lockdown extension by Government has wiped off volume during first two months of current fiscal (Apr/May 2020). Each lockdown extension by 15 days has taken toll on full year industry demand by 3-5 per cent. Given the adverse overall conditions, ICRA continues to have ‘Negative’ outlook on the PV industry since Q2 FY2020.
 
Giving more insights, Mr. Ashish Modani, Vice-President, Co-Head, Corporate Ratings, ICRA Limited, said, “Compared to our initial expectation of about 50-55 pc decline in volume during Q1 FY2021, the decline could be upwards of 80 pc thereby significantly impacting overall volume growth estimate for full year. While demand environment is likely to remain weak for next 4-6-month, low base of Q2 FY2020 (when wholesale dispatches declined by 29 pc Y-o-Y) will moderate pace of decline in Q2 FY2021. As against an actual estimated volume decline of 17.9 pc in FY2020, the decline during FY2021 could be 27pc -30pc in worst case scenario, compared to base scenario of 22pc-25pc.”
 
Due to confluence of multiple factors like liquidity crunch and tighter financing environment, weak rural income and overall slowdown in economic activity, consumer sentiments has been  negatively impact, said ICRA. As a result, industry demand has been under pressure over the last few quarters. Some signs of recovery visible Q4 FY2020, almost came to a naught post COVID-19 pandemic outbreak which significantly altered the macro-economic environment, it added. 
 
ICRA expected the GDP to decline by 5 pc in FY2021 as compared to earlier 4.7 pc growth expectation prior to COVID-19 lockdown. Real income is likely to decline in near-term which will directly impact large discretionary purchases like car, real-estate amongst others.
 
Coming to the credit profile of PV OEMs, players with strong market position and liquidity buffer will be able to weather the current slowdown. Whereas a large number of weaker players may witness moderation; and in the interim, will have to depend for financial support from their stronger promoters.
 
In the case of dealerships, those that have undertaken debt-funded expansion in the recent time or are catering to weaker OEMs have already started witnessing deterioration in credit profile. The overall outlook on automobile dealerships industry continues to remain Negative, because of expected decline in profitability levels; also due to weak demand and liquidity crunch faced by several dealerships. 
 
Across PV industry value chain, dealerships and smaller Tier 1/Tier 2 vendors are most vulnerable to current turmoil with many of these players likely to witness business closure, though large Tier-1 or OEMs are relatively better placed due to their strong financial flexibility.
 
ICRA noted that the credit metrics for PV OEMs, their dealers as well as their vendors has been impacted, notwithstanding accommodative commodity prices. This comes amidst rapid and mandatory technological advancements in vehicle safety and emissions, which has led to sizable capital expenditure by PV OEMs and their vendors over the past few years. 
 
Sharp decline in volume amid heightened investments by OEMs will impact return indicators of industry participants in the near term. Moreover, debt funded dealership modernization and expansion has also taken toll on dealerships capital structure and net profitability.
 
“Going forward, the outlook on the passenger vehicle sector could turn to Stable from Negative, if demand environment improves on a consistent basis over the next 12-18 months. Recovery in rural income and improvement in overall economic activity remain crucial to have any meaningful improvement in retail demand off-take,” added Mr. Modani.
 

Move To Top  < Previous News   |   Next news >

 

Leave a Comment


Not readable? Change text.

Comments