The contraction in the automotive sector due to economic slowdown will bottom out in the third quarter of the current fiscal, according to the Automotive Tyre Manufacturers’ Association (ATMA).
“The growth in sales of passenger vehicles and two-wheelers in the month of October has brought much-needed respite to the sector after months of de-growth which had dampened the sentiment,” said Rajiv Budhraja, director general (DG), ATMA in the latest newsletter. “It is expected that economic de-growth will bottom out in Q3 and a slow and steady revival will mark FY21,” he said.
Mr. Budhraja hopes the new reform measures announced by the Centre, especially the cut in corporate tax rates, would help revive sentiment.
In the first six months of FY20, overall tyre production dropped by 11% to 148 lakh units. Truck and bus tyre production witnessed a sharp fall of 31% while that of passenger cars and motorcycle tyres contracted by 11% and 8% respectively. However, in the month of September 2019, passenger car tyre production witnessed some upward movement, ATMA said.
During the same period, overall tyre exports grew by 11% to 57.77 lakh units. Truck and bus tyre exports rose 5% and those of passenger car tyres by 21% respectively.
Echoing the present economic situation such as economic slowdown and liquidity crunch, the vehicle production of medium and heavy commercial vehicle contracted by 72% in September, passenger cars by 18% and light commercial vehicles by 27% respectively, ATMA said.
In the case of tractor production, the segment witnessed a sharp drop in the first quarter and recouped in the second quarter though production remained at a lower level.
