With BSVI coming in, woes of Indian car makers are from over, says rating agency
- The Indian auto industry was caught in the midst of a massive slowdown with companies like
Maruti Suzuki, Tata Motors, reporting fall in sales volume month after month.
- A Fitch report says that with the
BSVIvehicles coming in, it’s going to have a heavy impact on the passenger vehicles demand.
- The agency had also downgraded Tata Motors to ‘BB-’ with a negative outlook
The industry was caught in the midst of a massive slowdown with companies like Maruti Suzuki, Tata Motors, reporting fall in sales for the last 12 months.
While the festive season brought in some respite, a Fitch report says that with BSVI regulations vehicles coming in will have a heavy impact on the passenger vehicles demand.
“High dealer inventories coupled with weak consumer sentiment and deferment of purchase decisions ahead of BS6 will limit any significant boost. Higher vehicle costs under BSVI are likely to weigh on PV demand in FY21,” said the report.
Giving the auto sector a negative outlook, the report further said that “as the industry grapples with lower volumes amid a highly competitive landscape,” the cash flow generation too will remain negative. This is because auto makers will have to invest in electric vehicles for the next few years.
Earlier, the agency had downgraded Tata Motors to ‘BB-’ with a negative outlook because of lesser chances of “TML's profitability and free cash generation in the next two to three years”.
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