The onset of the festive season, combined with a relatively stronger macroeconomic environment and easing semiconductor shortage may help the car market in India retain strength amid a global fall in vehicle sales, according to Moody’s. The ratings agency switched outlook for the global automotive industry from ‘stable’ to ‘negative’, but called India a ‘bright spot’. Global car sales are expected to fall due to various reasons, including shortage of parts, regulatory pressures, and consumer sentiment, Moody’s said. On the other hand, sales volumes in India jumped 12.5 per cent this year. The leap is expected to proliferate by another four per cent in 2023, according to Moody’s.
Car dealers in India are restocking saying the customer demand is gaining momentum. A channel check conducted by JM Financial across 26 dealerships in 11 states showed that the demand for passenger vehicles remained robust. Further, new models being launched by various manufacturers are contributing to the rising demand. The global outlook, however, remained grim. In the Asia-Pacific region, moving along the same lines as India is China, the world’s largest car market, where the auto sector is expected to grow by four per cent this year. The growth is reported to further increase 3.5 per cent in 2023. Moody’s said that both nations are expected to return to 2018 levels in automotive sales.
Europe is expected to be the weakest among all countries. The Ukraine invasion by Russia has posed a threat to the supply efficiency in Europe. The EU (European Union) policy to switch to battery-powered vehicles is rapidly gaining pace. As a result, the EU is preparing a ban on sales of new internal combustion engines by 2035, which is substantially tampering with consumer sentiment. Europe, in the first eight months of this year, witnessed an 11.9 per cent decline. Although slow, sales volume in European countries can expect a bounce back next year. The report expects a similar condition in the remaining parts of the EMEA (European, Middle Eastern, and African) countries. Collectively, the report expects a decline of 5.2 per cent this year.