Fitch, Auto News, ET Auto

New Delhi: Fitch Answers on Wednesday said it expects auto production in India to agreement by eight.3 per cent in 2020 as the car market faces expanding threat of offer lack owing to China’s coronavirus outbreak, possibly hitting domestic output if the virus spreads in the place.

In China, where by the virus originated, automotive brands have halted production in purchase to limit the congregation of individuals and reduce the exposure of its populace to feasible an infection and “we see India adopting similar guidelines if the virus spreads throughout the place,” it said.

Given that India’s wellness treatment process is unwell-equipped to deal with a large scale epidemic, the rating agency said “the effects on Indian autos will be much bigger due to the fact the virus will very likely spread much speedier in the place when in contrast to China”.

In addition, due to the fact China is a person of India’s premier provider of automotive components, a slowdown in the offer of China-created components will direct to shortages in India and could drive car makers to gradual or quit production.

As a result, we forecast auto production in India will agreement by eight.3 per cent for 2020, following an estimated contraction of thirteen.two per cent in 2019.

The agency said that it believes that the weak domestic demand from customers for new vehicles will see India’s auto production keep on to agreement in 2020.

“China materials India with in between ten-thirty per cent of its automotive components, and this could be two to 3 occasions larger when searching at India’s EV phase, which highlights just how uncovered India’s automotive producing market is to the slowdown of auto Chinese component producing,” it said.

Fitch also believes that the protectionist guidelines introduced in the country’s 2020 Finances with regards to electric vehicles will offer some upside opportunity for nearby EV production, but it will be accompanied by elevated trade threat.