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Vehicle sales slump fear

The overall wholesale dispatches will decline 10-12 per cent in the current financial year
A deserted Outer Ring Road in Bangalore.

Our Special Correspondent   |   Calcutta   |   Published 19.04.20, 09:53 PM

The Covid-19 pandemic will have a severe impact on domestic passenger vehicles (PV) in 2021-22.

The overall wholesale dispatches will decline 10-12 per cent in the current financial year. Market sentiments will be depressed owing to the lockdown with buyers putting off non-essential purchases as their income levels plunge, according to a report by rating agency Icra.

This will delay the industry’s recovery prospects by about six to eight months. Recovery in rural income and an improvement in the overall economic activity will be crucial for a meaningful improvement in retail demand offtake.

Ashish Modani, vice-president, co-head, corporate ratings of Icra Ltd, said, “The domestic passenger vehicle (PV) industry is witnessing a demand slowdown for the last 4-6 quarters because of factors such as economic slowdown, a tight financing environment and inventory de-stocking at dealerships. This has affected wholesale despatches. As a result, industry wholesale volumes declined 17.9 per cent during 2019-20.”

“PV purchase being a discretionary item, an improvement in consumer sentiments and an overall growth uptick in economy is crucial to have any meaningful recovery in the industry. However, the Covid-19 outbreak has drastically altered the landscape and domestic economy is expected to witness significant shock during Q1,” Modani added. 

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