Car sales likely to fall 25% in FY21

New Delhi: Automobile makers are in for tough period at least in the short to medium term as the period of poor sales is expected to continue well into the first half of current fiscal year with only a moderate recovery thereafter.

Vehicle sales across the country had remained subdued for last several months over economic slowdown and subsequent slowing of demand. But the Covid-19 pandemic and lockdown has brought automobile industry on its knees with most companies reporting zero sales in April.

According to a report by global analytic firm Crisil, with the current disruption in the economic activity, passenger vehicle (PV) sales could de-grow 25 per cent in fiscal 2021. This is on top of an 18 per cent decline in fiscal 2020. What this means is that companies are expecting subdued demand for vehicles even after the lockdown is withdrawal and businesses try to return to normal.

While PV sales reaches new low in FY21, it would try recover gradually in the second half of this fiscal. Crisil has said that over fiscals 2021-2024, sales are likely to log 12.6% CAGR that should be music to ears of companies. "The PV market has huge potential because of lower penetration of vehicles, which stands at 23 PVs per 1,000 people. In comparison, China has 155 PVs per 1,000 people and Brazil 119. Hence, we expect PVs to continue to boost passenger traffic and toll collections in future," the Crisil report said.