Cautious credit outlook despite demand recovery for auto ancillaries; Fitch
19 Jan 2010
New Delhi: The recovery in India's domestic automotive sales in H209 is likely to spur business for auto suppliers in 2010.
In a just published special report, Indian Auto Suppliers Outlook 2010: Cautious Credit Outlook Amid Recovery in Demand, rating agency Fitch, however, cautioned that given the restoration of capex plans by most auto suppliers and expected pressures on margins, the credit profiles of Indian auto suppliers in the medium-term, wwas a matter of concern.
In addition, the pace of growth could vary across segments, with commercial vehicles (CVs) expected to register a staggered recovery.
In line with Fitch's expectations at the beginning of 2009, export-oriented suppliers will continue to face pressures over the short-term as weak demand in international markets plagued those suppliers who cater to export markets, either directly or indirectly, through domestic original equipment manufacturers (OEMs).
Fitch projects in its report, that domestic auto sales would witness significant growth in 2010 with passenger vehicles (PV) leading the way.
This growth is likely to be supported by government stimulus to boost CV sales, a favourable demand scenario, and new product launches from OEMs to benefit the PV segment.
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