India auto unit sales likely to decline by at least 30 per cent in 2020

Moody's Investors Service in its latest report has stated that India's auto sector is likely to face challenges this year, with the country's economy predicted to contract in 2020 amid the pandemic.

It added that the auto unit sales will decline at least 30 per cent in 2020, following a decline of over 40 per cent till July 2020. It said that ‘the lower annual decline reflects our expectation of a pickup in the economic activity during the remainder of 2020, which also includes the festive period - October to December’.

The agency further said that the second wave of infections and extension of lockdowns may cast a shadow of risk on these forecasts. Also, constricted lending standards could bind liquidity accessible for consumers and auto dealers. As per the report, looking ahead, unit sales are likely to improve around 20 per cent in 2021, though clearly on a lesser base. Additionally, it will take at least another four years for India's unit sales to recover to pre-pandemic levels.

On the other side, the global automotive industry's outlook has been changed to stable from negative. It said that the stable outlook for the global automotive industry reveals growing sales through 2021, with continued but slow increase through 2023. Nonetheless, auto-shipments will not recover to pre-pandemic levels until the middle of the decade. It noted that the Coronavirus-driven downturn in unit sales is significantly worse than the 2009 decline.