The GDP growth slowed down to 6.1% in 2018-19 and is projected to hit a 10-year low of about 5 per cent in 2019-20, primarily due to falling consumer demand and poor financing options for high-value items like automobiles. Vehicle sales have been hampered by weak consumer sentiment and still-weak availability of financing following tighter liquidity at non-banking lenders since the middle of 2018. The sector also faces additional challenges from the adoption of stricter emission standards from April 1, the report said. Nonetheless, higher price tags for these new models, which may cost up to 15 % more for diesel variants, are likely to weigh on demand, Fitch added. Increased cost, weak demand and intense competition can also squeeze automakers' profitability, although they appear to be taking a disciplined pricing approach so far.

Source: Mint February 19, 2020 14:15 UTC