Contact Your Financial Adviser Money Making MC
30
November 2016
 |
| Fuel price (The Total Investment & Insurance Solutions) |
Low fuel prices coupled with an
accommodative monetary policy from the Reserve Bank of India (RBI) is what
credit rating agency Fitch Ratings expects to support demand for passenger
vehicles in 2017.
The Total Investment & Insurance Solutions
According to Fitch, the
demonetisation of 500/1,000-rupee notes would impact sales of luxury cars and
not sales of other automobiles -- two wheelers, small cars and commercial
vehicles.
"Undeclared income is less
often used to buy small cars, and two-wheeled and commercial vehicles, so sales
of these are likely to stabilise quickly once the liquidity situation in the
economy is restored in the near future," Fitch said on Wednesday.
"We expect PV (passenger
vehicles) sales to increase by seven per cent - nine per cent, after rising
12.3 per cent YoY (Year-on-Year) in April-September 2016, due to improving
consumer confidence, new model launches and the lifting of a ban on the sale of
diesel cars in Delhi," Fitch said about 2017 sales outlook for automobiles.
According to Fitch, the rollout of
the Goods and Services Tax (GST) in its current form would be largely price
neutral because the proposed rates are in line with the existing level of
taxes.
Fitch expects auto sales to benefit
from India's strong gross domestic product (GDP) growth, which the agency
forecasts at 6.9 per cent in the fiscal year ending March 31, 2017, (FY17) and
7.7 per cent in FY18. The Total Investment & Insurance Solutions
The credit rating agency said sales
of medium and heavy commercial vehicles (MHCV) rose about 30 per cent YoY in
FY16, although they decreased slightly by 1.2 per cent YoY during
April-September 2016. The Total Investment & Insurance Solutions
Fitch expects MHCV sales to improve
with progress on stalled infrastructure projects and gradual recovery in mining
activity after metal prices bottomed out in 2016.
The agency said MHCV sales to
benefit from buying ahead of an expected increase in prices when new emission
standards (BS IV) are implemented from April 1, 2017.
Fitch expects light commercial
vehicles (LCV) sales to continue to rise, and a significant demand boost if the
GST -- which will create an unified national market that would allow more efficient
movement of goods -- is rolled out in April 2017 as planned.
Similarly, sales of two-wheelers
would continue to rise due to rise in public sector wages and healthy rural
spending.
The Total Investment & Insurance Solutions
Two-wheeler exports are likely to
remain subdued due to macroeconomic weakness in Latin America and Africa,
following a 12.4 per cent YoY decline in April-September 2016.
Many companies, including Maruti
Suzuki, Toyota and Royal Enfield, have announced plans to expand capacity,
which will increase capex.The Total Investment & Insurance
Solutions
No comments:
Post a Comment