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Car dealerships in trouble, many face closure

Most car dealerships in India are in deep trouble these days. Given the lack of easily available and affordable consumer finance, car sales are going down and dealers are facing inventory pile up and profits are declining. The severity of the situation is, of course, different for different car dealers but up to 100 or more car dealerships across the country could be facing closure over the next few months.

According to the Federation of Automobile Dealers Association (FADA), more than 50 car dealerships across India were shut down in 2008 and more could follow suit this year...

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Fitch Ratings: 2009 Auto components outlook

he outlook for the Indian auto component sector derives from Fitch Ratings’ outlook on domestic original equipment manufacturers (OEMs), as well as the agency’s outlook on the global automotive sector.

With substantial demand and margin pressures being faced by both Indian and international OEMs, the domestic auto component sector is also likely to face substantial operating pressures in calendar year 2009 (CY09). Component players will likely face demand pressures in line with their customers, although the impact on cash flows could likely be more severe in view of OEMs lengthening their payment periods.

Export-focused players are likely to face additional pressure from receivable risks on the back of the deteriorating credit profiles of the large international auto majors...

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Fitch Ratings: 2009 Indian automotive sector outlook – a special report


The Indian auto sector (passenger cars and commercial vehicles (CVs)) underwent one of the longest and strongest positive cycles to end-September 2008 (Q3CY08), while year-on-year (yoy) sales growth has since decelerated rapidly. In Fitch Ratings’ 2008 Outlook for the sector, the agency acknowledged the inherent cyclicality of the demand pattern, wherein a three-to four-year growth spurt was followed by a two-year downturn.

However, Fitch’s expectation for a sector recovery from H2CY08 has been delayed due to various macroeconomic factors, including tight liquidity and credit availability, slower GDP and industrial production (measured by the index of industrial production (IIP)) growth rates, and depressed investment/consumer sentiment...

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Russia poised to become the world’s third-largest automobile market by 2012

According to a Frost & Sullivan report, Russia will be the world’s third-largest market for cars by 2012, behind the US and China.

While Russia has not been immune to the worldwide economic recession, and has seen vehicle sales slipping over the last few months, experts predict the country will make a very strong recovery in 2010. ‘As soon as the Russian banking sector overcomes months of financial turmoil and automotive loans are available again for Russians, sales of passenger cars are expected to revive,’ says Andriy Ivchenko, Industry Analyst at Frost & Sullivan.

‘Given the fact that more than 45% of the passenger car sales in Russia were financed through bank loans, the financial crisis in Russia forced banking system to almost put on hold all new automotive loan applic...

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