India Ratings and Research (Ind-Ra) on Monday said it has revised its outlook on the auto sector to stable-to-negative from stable for the remaining of the current fiscal.
The outlook revision reflects the rating agency's expectation of negative volume growth in the industry in the midst of weak urban and rural consumption coupled with limited credit availability and rising cost of ownership, Ind-Ra said in a statement.
"The agency expects high, single-digit volume de-growth in the range of 8-9 per cent year on year in total domestic volumes in 2019-20," it added.
Although first half of the fiscal witnessed sharp de-growth in volumes, the second half will see flat-to-low single-digit growth, supported by the festive season and pre-buying due to the likely price rise from April 2020 after the enforcement of Bharat Stage VI (BS-VI) emission norms, it said.
"Ind-Ra expects the second half of the year to be better than first half as inventory levels, to a large extent, should normalise by end-October 2019. Further, the festive season in the third quarter and the expected pre-buying during fourth quarter is likely to drive retail demand," it said.
While Ind-Ra expects flat growth for passenger vehicle and two-wheeler volumes in second half of the fiscal, commercial vehicle revival will take longer with continued negative growth in second half as well, it said.
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