May 2020 \ Business & Investment \ Business and Governance
Covid-19 pandemic puts 50% of passenger vehicle sales at risk: Crisil

The economic fallout of Covid-19 pandemic ...

  • Mr Hemal N Thakkar

The economic fallout of Covid-19 pandemic puts 50 per cent of passenger vehicle sales at risk, a study by Crisil Research showed in April. Sales of discretionary automobiles such as passenger vehicles and two-wheelers are likely to remain under pressure in the near term, it said. “As things stand, even if the nation-wide lockdown is lifted on May 3, 2020, resumption of normal operations at automobile dealerships would depend on whether a dealership is outside the demarcated hotspots and if it has the necessary licences from the state or district administration to operate,” Crisil Research said. “Besides, GDP growth is forecast to slow down to 1.8 per cent this fiscal, portending demand-side pressures.”

Accordingly, to capture the magnitude of risk for automobile sales, the integrated research house deployed a two-factor framework, comprising the industry’s sales opportunity and the size of risk from Covid-19. “The opportunity was captured in terms of district-wise concentration of sales and growth momentum, and the risk in terms of district-wise assessment of present case intensity and further risks of virus spread,” the study said. “Segregating the districts by the level of risk from the pandemic, the study shows that ‘high impact’ and ‘very high impact’ districts together account for 56 per cent of two-wheeler sales and 6 8 per cent of passenger vehicle sales in India.”

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