Mumbai: Rating agency Fitch has maintained a stable outlook for the auto sector on the back of falling ownership cost due to lower fuel prices and new launches.
With a consensus expectation of better monsoons this year and new model launches intensifying competition in the passenger car and two-wheeler segments, the agency believes replacement demand will increase, supporting commercial vehicle demand.
“In addition, the 23.5 per cent salary hike for government employees will provide a one-time demand boost to all automobile segments,” the report said.
Industry lobby SIAM, in April, had revised downwards its growth forecast for passenger vehicle sales to 6-8 per cent for the current fiscal, citing high taxation and unfavourable environment around diesel vehicles.
In March too, the Society of Indian Automobile Manufacturers (SIAM) had lowered its growth forecast for 2016-17 to 11 per cent, from the earlier 12 per cent, after the imposition of infra cess ranging between 1-4 per cent in the Budget.
Car sales logged the highest sales growth in five years at 7.8 per cent in 2015-16, driven largely by new model launches and heavy discounts. Mot-orcycle sales for the fiscal were down 0.24 per cent to 1,07,00,466 units while sales of commercial vehicles rose 11.5 per cent to 6,85,704 units as against 6,14,948 in 2014-15.
