India remains bright spot for car sales; to outshine regional, global peers this year: Moody's

Robust car sales during the ongoing festive season amid the easing of chip shortage will help the Indian automobile industry outshine its regional and global peers this year, Moody's Investor Service said on Thursday.

Aided by favourable aspects, the car sales volumes this year in the country are expected to increase by 12.5 per cent and another 4 per cent in 2023, it stated.

"India remains the bright spot for car sales this year. So far in 2022, sales are steady and we expect a stronger fourth quarter with the onset of the festive season starting at the end of September," as per a note prepared by Moody's Investor Service.

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A relatively stronger macroeconomic environment, the easing of semiconductor shortages as well as restocking by dealers will help India outperform its regional and global peers, it added.

APAC will be the strongest of the major regions in 2022, growing by 3.5 per cent driven by growth in China and India, Moody's Investor Service said.

"We forecast 2022 auto sales will rise 4 per cent in China, the world's largest auto market, and gain a further 3.5 per cent in 2023. By 2023, we expect automotive sales in China and India will return to 2018 levels, while the recovery in Japan remains protracted," it added.

Moody's Investor Service said it is changing its outlook for the global automotive industry to negative from stable.

"This is driven by a weakening macroeconomic environment and risks affordability diminishes consumer demand," it added.

Higher cost of living (including energy), which is not being offset by salary increases, higher vehicle prices because of costlier production along the entire auto supply chain and higher interest rates are making the car buying less attractive, Moody's Investor Service noted.