According to Sewells Group Automotive Dealer Confidence Index (ADCI) survey, the retail sales in the auto sector would also be impacted by "lack of meaningful policy changes".
"The level of dealer confidence at the end of FY2014-15 ...Paints a sobering picture of retail sales for the next six months. It is likely that the current level of confidence is severely impacted by unseasonal rains and weakening rural demand," Sewells Group CEO Jayesh Jagasia said in a statement.
The lack of meaningful policy changes that impact the auto industry positively is also a likely roadblock in improving dealer sentiment. The sentiment is likely to improve only after the first shoots of recovery appear on the ground, he added.
It was conducted in the beginning of April 2015, and 175 dealers from 121 cities, representing 21 brands across passenger car, two-wheeler and commercial vehicle categories.
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As per the survey findings, the passenger car index has slipped into negative territory after staying positive at the end of the last two quarters.
The two-wheeler index continued to slide for the second quarter in a row, indicating the lack of optimism amongst two-wheeler dealers, the survey said.
The commercial vehicle index stood at -44, which is an all-time low, it added.
The index is designed to vary between -100 and +100 where an index score of -100 represents the most pessimistic outlook, and +100 indicates the most optimistic sentiment.