India’s overall automobile sales will still show signs of little enthusiasm in the first half of 2019-20, but the upcoming implementation of BS-VI emission norms will drive the demand in the second half of the year, according to India Ratings and Research (Ind-Ra).
According to the the ratings agency, the passenger vehicle (PV) segment, which has clocked a 4 % growth in the ten months of the ongoing fiscal, is expected to grow steadily next fiscal.
The commercial vehicle (CV) segment, which has grown 23 % in the ten months of 2018-19, is expected to see high single-digit to low double-digit growth in 2019-20, Ind-Ra said in a statement.
Two-wheelers are also geared for steady growth in the next fiscal, it said. The segment has grown by 8 % so far in the ongoing fiscal.
Buying procurement on the expected price rise in 2020-21 due to the implementation of BS-VI norms, improvement in consumer sentiments along with new model and variant launches will be among the key growth drivers for the PV segment.
The rise in rural income and growing middle class population with increasing disposable income will be the key growth drivers for two-wheeler segment, along with a young population showing preference for premium products.
While maintaining a stable outlook for automobile sector, the ratings agency said BS-VI implementation from April 1, 2020 will make vehicles costlier across all segments.
“As per industry estimates, the cost of petrol variant PVs and two-wheelers could increase 10-15 % and that of diesel variant by 20-25 %,” it said.
Due to this, Ind-Ra expects demand to pick pace in second half of 2019-20, but it may still be lukewarm in the first half, it said.
