Moody's expects passenger vehicle (PV) sales in India to grow 8 percent this year on account of new model launches, lower fuel costs and ease in financing, although it revised the outlook for global auto industry to negative.
The credit rating agency said it is changing the outlook for the global automotive manufacturing industry to negative from stable on account of weakening global demand.
"In India, we expect (sales) volumes to grow at around 8 percent in 2016, to just under 3.4 million, and to continue this healthy growth trajectory with unit shipments climbing 6 percent in 2017," it said in a statement.
New model launches by domestic and foreign manufacturers, lower fuel costs and ease in financing will support this volume growth, it added.
"Performance for India's Tata Motors (Ba1 stable) and Mahindra & Mahindra (Baa3 stable) should largely mirror this positive sentiment," it said.
Moody's Investors Service said, on the other hand, the global outlook reflects expectations for fundamental business conditions over the next 12-18 months.
"We lowered our outlook on the industry to negative to reflect the challenges automakers around the world will face as a result of softening demand following an extended period of growth in key markets," Moody's Senior Vice President Bruce Clark said.
And while profitability in the sector was previously supported by robust growth and strong margins in US and Chinese markets, today's revised outlook underscores the plateauing demand in the US, coupled with meaningfully diminishing demand in China, he added.
Moreover, sales in Europe are forecast to contract modestly in 2017 while Japan will see sales growth of less than 1 percent in the timeframe, credit rating agency said.
"Auto sales in China will grow 2.7 percent in 2017 as compared to 6.7 percent growth this year. If a tax cut on passenger vehicles with engines of 1.6 liters or smaller is extended by the Chinese government beyond year-end, it could positively affect sales growth in 2017," it added.
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