Automakers are likely to witness a revenue decline of ₹20,000 crore for the second quarter ended September this year, compared with a year ago, due to a demand crunch, Acuité Ratings & Research Ltd. said in a report.
It said the auto sector’s GDP contribution may also decline to 7% and total domestic sales may decline by 6-7% year on year (YoY) to approximately 25 million units in FY20. The sector’s revenue may also decline by 5-6% YoY, it added.
“The overall revenue of OEMs is expected to decline 23-25% year-on-year in Q2FY20. As a result, the sector’s contribution to Gross Value Addition (GVA) of the country will also drop, leading to an overall decline in its GDP contribution,” Acuité said.
“Consequently, any decline in revenue and sales of OEMs will directly impact the auto ancillary players and dealers as well. We expect that in FY20, revenue of the sector may also decline by 5-6% YoY to ₹3-3.2 trillion compared to the previous year’s ₹3.35 trillion. In Q2FY20, we are expecting the revenue to be in the vicinity of ₹0.6 trillion as compared to ₹0.8 trillion the previous year, recording a decline of 23-25% YoY,” it said.
It said though in September 2019, total wholesale domestic sales declined by 22.4% to 2 million units from 2.58 million units in the same month last year, total sales showed a growth of 10.1% from the previous month MoM in the same period indicating somewhat of a revival for the industry.
