NEW DELHI: The passenger vehicles demand is estimated to decline by up to 25 per cent in the financial year 2020-21, rating agency ICRA said on Monday.
The rapid spread of Covid-19 across the country and consequent lockdown extension by government has wiped off volume for Indian Passenger Vehicle (PV) Industry during the first two months of the current fiscal year, ICRA noted.
Earlier, normalcy was expected by the second week of May. But, with each lockdown extension, it has taken a toll on full year industry demand by 3-5%. Given the adverse overall conditions, ICRA continues to have a ‘Negative’ outlook on the PV industry since Q2 FY2020.
Giving more insights, Ashish Modani, Vice President, Co-Head, Corporate Ratings, ICRA Limited said, “Compared to our initial expectation of about 50-55% decline in volume during Quarter one of FY2021, the decline could be upwards of 80% thereby significantly impacting overall volume growth estimate for full year. This will be in case lockdown extension continues further in large markets like Mumbai Metropolitan Region, National Capital Region, Chennai and Ahmedabad which along with Hyderabad and Bengaluru are amongst the biggest PV market.”
Some signs of recovery are still visible in Q4 FY2020 post Covid-19 pandemic outbreak which significantly alter the macro-economic environment. ICRA expects GDP to decline by 5% in FY2021 as compared to growth expectation of 4.7% prior to Covid-19 lockdown.
“Going forward, the outlook on the passenger vehicle sector could turn to Stable from Negative, if the 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 Modani.

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