INSUBCONTINENT EXCLUSIVE:
New Delhi: Ratings agency Ind-Ra today maintained stable outlook for the automobile sector for the remainder of FY'19.
India Ratings and
Research (Ind-Ra) however said an upward trend in interest rate and fuel prices would increase cost of ownership for end-consumers and hence
curtail PV demand to a certain extent and also affect smaller CV fleet operators.
Maintaining the stable outlook, Ind-Ra said it was in line
with earlier expectations of moderate sales volume growth in passenger vehicle (PV), double-digit growth in commercial vehicle (CV) and
steady growth in the two-wheeler segment (2W) on a year-on-year basis.
"While the growth momentum in CVs is likely to continue, thanks to
improved economic activity, increased infrastructure development and improved mining activities, the growth rate is likely to moderate in
2HFY19 due to a higher base," the ratings agency said in a statement.
Amid several regulatory changes undergoing in the industry, CV growth
would remain susceptible to clarity regarding the new axle load norms and vehicle scrappage policy, it added.
Demand for two-wheelers and
PVs would continue to be driven by increasing disposable income.
In two-wheelers, the growth rate in motorcycles is likely to outpace the
growth rate in scooters, primarily due to a favourable monsoon as well as an increase in rural income, it added.
On the challenges ahead,
Ind-Ra said the upward trend in interest rate and fuel prices would increase the cost of ownership for end-consumers and hence, curtail the
PV demand to a certain extent, especially in the entry-level segment, where consumers are price-sensitive.
"Even the smaller CV fleet
operators are likely to be affected, as the increase in freight rate is unlikely to be commensurate with the increase diesel prices, thus
impacting their profitability and demand for additional fleet," it said.
