Fitch cuts India's auto loan sector outlook

Fitch Ratings has revised the outlook on the Indian auto loan sector to “deteriorating” from “neutral”, driven by the expectation of a slower domestic GDP growth amid a global economic slowdown. Elevated inflation and tighter monetary policy too also are likely to hurt demand in the sector, the rating agency said.

Economic conditions remain challenging for the underlying auto loan assets as they are mainly commercial-vehicle loans in nature. Those loans are mostly extended to small road transport operators, who tend to be more vulnerable to economic shocks, Fitch Ratings said in a statement on Tuesday. “The worldwide economic slowdown is also likely to reduce demand for Indian exports. A slowdown in industrial activities could weigh on the performance of medium and heavy commercial vehicles, which are used mostly for long-haul transportation,” the statement said.