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According to the rating agency CRISIL, passenger vehicles sales volume (including exports) are expected to fall by 22-25 per cent this fiscal to a decadal low of 26.5 lakh units. The fall in off-take will mark the second straight year of double-digit volume decline after the 15 per cent fall seen in fiscal 2020.
The rating agency stated that the credit quality of most passenger vehicle makers (OEMs) would remain stable because of strong balance sheets and healthy liquidity. However, in some cases, support from a strong parent or group will help drive the rough terrain. Crisil analysed eight-passenger vehicles makers accounting for 80 per cent of industry sales volume.
In a statement CRISIL said, "Crisil has assumed 60 per cent fall in domestic dispatches in the first half of this fiscal in line with the staggered opening of dealerships from May 2020, followed by a 6-8 per cent revival in balance half of the fiscal, driven largely by improved rural demand. This along with a 15 per cent drop in export volumes will lead to 22-25 per cent fall in overall sale volume in fiscal 2021."
"PV makers will continue offering discounts through the first half, and partly absorb the higher cost of BS-VI (Bharat Stage VI) variants given tepid demand. The impact of this will be 150-200 basis points, with operating profitability settling at 6-7 per cent this fiscal for the sample set, owing to low operating leverage, with 80 percent of cost pertaining to raw materials," it further stated.
In other recent auto news, Tata Motors has rolled out a variety of service initiatives for its customers to provide consistently high-quality service during the lockdown. Between March 23 and June 10, the company attended 225 vehicles of customers who are essential service providers and frontline workers for the COVID-19 pandemic.
Customers can also dial the Tata Motors exclusive service hotline number - 18002095554, and request for a servicing appointment for their vehicles. To cater to customer requests for sanitization of their vehicles, Tata Motors has introduced a special initiative, ‘No touch by hand'.
Thoughts About Passenger Vehicle Sales Decline
Due to the COVID-19 pandemic, many businesses across the globe have been affected. The auto industry has also taken a huge hit and many dealerships across the country are on the verge of shutting down permanently. Due to the pandemic, the sales of passenger car vehicles are expected to decline drastically this fiscal year.