ICRA expects BS-VI vehicle prices to be higher by 10-12 per cent from their BS-IV counterparts.
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Rating agency ICRA maintained a “negative” outlook on the passenger vehicle (PV) and commercial vehicle (CV) segments while maintaining a “stable” outlook on the two-wheeler OEMs and tractor segments. The negative outlook on the PV sector was due to the slowing economic growth, the sharp decline in wholesale despatches to destock dealership inventory as well as tepid retail demand, Icra said in a release. Industry demand has come under pressure over the last few quarters due to factors such as liquidity crunch and tighter financing environment, weak rural income and an overall slowdown in economic activity which has adversely impacted consumer sentiments, as per the rating agency.
Dealership inventory level was at an elevated level (about 6-8 weeks) during the fourth quarter of the last fiscal, and subsequent inventory rationalisation measures by OEMs as well as dealerships have resulted in sharp 18 per cent decline in wholesale despatches during the first eight months of the current fiscal as compared to single-digit decline in the retail volume over the same period, it said. There was a sharp divergence in retail demand growth and wholesale despatches during the first half of FY20 as the focus was towards reducing inventory level, Icra said.