India's auto sector is expected to face challenges this year, with the country's economy predicted to contract in 2020 amid the pandemic, Moody's Investors Service said on Tuesday.
According to it, auto unit sales will decline at least 30 per cent in 2020, following a decline of over 40 per cent in the seven months through July.
"The lower annual decline reflects our expectation of a pickup in economic activity during the remainder of 2020, which also includes the festive period - October through December," the Moody's Investors Service said in a report.
"A second wave of infections and extension of lockdowns cast a shadow of risk on these forecasts. Also, tighter lending criteria could limit liquidity available for consumers and auto dealers."
As per the report, looking ahead, unit sales will likely grow around 20 per cent in 2021, though clearly on a lower base.
"Moreover it will take at least another four years for India's unit sales to recover to pre-pandemic levels," the report said.
On the other hand, the global automotive industry's outlook has been changed to stable from negative.
"The stable outlook for the global automotive industry reflects rising sales through 2021, with continued, but slow, increases through 2023," said Bruce Clark, Moody's Senior Vice President.
"Nevertheless, auto shipments won't recover to pre-pandemic levels until the middle of the decade."
The coronavirus-driven downturn in unit sales is significantly worse than the 2009 decline, Clark said.