Indian auto sector outlook receives stable to negative ratings

Rising fuel prices, higher rates of interest, failing consumer sentiments and other factors have all had an adverse effect on auto sales in India during the past financial year. India Ratings & Research has evaluated the Indian auto sector giving it a stable to negative rating for Financial Year 2015.

India Ratings & Research Agency has rated major players in the industry taking into account that the past year has seen lower than expected sales. This has resulted in the agency revising their outlook to stable to negative from stable.

Indian auto sector outlook receives stable to negative ratingsAccording to estimates, the agency expects the commercial vehicle segment to post 6-9% decline in domestic volumes YoY, due to decline in operating margins as road freight rates have not been increased with corresponding increases in diesel prices.

The agency also estimates that passenger vehicles, utility vehicles and multipurpose vehicles will see a decline of 3-8% in FY 15 due to reduced affordability and rising cost of ownership. On the other hand demand in rural areas is slated to see a marked improvement, following favorable weather conditions all across the country. Post general elections in 2014 however, could see an improvement where both commercial and passenger vehicles are concerned and this improvement could be about 1-4% and 2-4% respectively.