Indian Automotive Sales to Stabilise During 2020: Moody's


Auto sales, which were drastically impacted by the general economic slowdown in India, are expected to stabilise during 2020, Moody's Investors Service said.

Moody's Investors Service's automotive manufacturing global outlook update said auto sales will be relatively flat after plunging 11.8 per cent in 2019.

"We expect Indian auto sales to rise 0.5 per cent in 2020, supported by stimulus measures discounts on new cars that do not comply with 'Bharat Stage VI' (BS-VI) emission norms, which will take effect in April," the update said.

"But weak consumer demand and tight liquidity will likely limit any improvement in car sales this year. In 2021, we expect Indian car sales to rise 2 per cent."

Overall, the update lowered the global sales forecast as the coronavirus outbreak reduces demand and disrupts automotive supply chains.

"We expect global auto unit sales to decline 2.5 per cent in 2020, narrowing from a 4.6 per cent drop in 2019, but worsening from the 0.9 per cent decline that we had previously projected for this year," the update said.

"We expect sales to rebound only modestly in 2021, with a growth of 1.5 per cent. Our outlook on the sector remains negative."

As per the update, the rating agency gave a forecast for global GDP growth of 2.4 per cent in 2020 and 2.8 per cent in 2021 assumes that the coronavirus outbreak will disrupt economic activity in the first quarter.

"Under our forecast, the spread of the coronavirus will be contained by the end of the first quarter, allowing for the resumption of normal economic activity in second quarter," the update said.

"While China's economy is by far the worst affected, the rest of the world is also exposed to short-term disruptions to supply chains. If the rate of infection does not abate and the death toll continues to rise, there is the potential for more severe disruptions in manufacturing supply chains, including in the automotive sector."