ICRA predicts small growth in 2014-15, and low profitability
Rating Agency ICRA does not see much optimism in the Indian passenger vehicle industry in the months ahead. ICRA predicts that the Indian vehicle industry domestic volumes are set to increase, but only marginally in 2014-15 due to weak demand that has not only affected the small car segment but also the utility vehicle segment.
ICRA predicts just marginal growth in the passenger vehicle segment in the months ahead. The small car segment controls about 55 to 60 percent of industry volume. Industry’s operating margin is currently under extreme pressure following weak volumes and reduced pricing power and it is this that will have a direct impact on domestic volumes in the future.
ICRA has also taken into account rising employee costs, wage hikes, discounts being offered by auto majors to boost sales and intense competition in the market. The recent excise cuts announced in the interim budget were looked upon as a silver lining to see increased demand but that too failed to see much promise and have added reasons for not expecting too much from Indian domestic passenger vehicle market.
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