Ratings agency Crisil Research in its latest report has said that the passenger vehicles (PVs) sales are likely to face further pressure in August 2019, mainly due to Original Equipment Manufacturers (OEMs) efforts to maintain normal inventory levels amid weak retail sentiments. It noted that the PV volumes are estimated to have dropped by about 27-31 percent in July 2019 as compared to the year ago period.
According to the report, automobile manufacturers in the country cut production by 11 percent in Q1 (April-June) of 2019-20 over the year-ago period amid the industry facing the worst slowdown with sales declining month after month. It also said that the OEMs continued to undertake production cuts in July as well. The production cut in the PV segment was as higher as 15 percent y-o-y while in the utility vehicles (UVs) segment it stood at 2 percent y-o-y.
Crisil Research further stated that wholesale off-take of goods carrying commercial vehicle in July is estimated to have fallen by over 20 percent on-year. Medium & heavy commercial vehicle demand fell due to an oversupply of freight-carrying capacity created after axle norm amidst weak freight demand and low finance availability due to NBFC liquidity crunch. Demand for light commercial vehicles fell, albeit at a lesser pace, due to tepid rural demand and weak finance availability, together lowering demand especially from market load operators.