Fitch Ratings

SIAM said two-wheeler sales went up by 6.63 per cent last month. While sales of scooters rose moved up by 9 per cent to 4.54 lakh units, those of motorcycles went up 5 per cent to 9.16 lakh units.

Fitch said the medium-term recovery will be slow. "Supply-side potential growth will be reduced by a slowdown in the rate of capital accumulation - investment has recently fallen sharply and is likely to see only a subdued recovery."

"The number of newly identified cases per day continues to trend lower in India, but it remains high and a successful vaccine rollout will be important to sustain economic recovery," Ftich ratings said.

India’s GDP shrank by a staggering 24 per cent year-on-year amid the imposition of one of the most stringent global nationwide lockdown.

Fiscal metrics have deteriorated significantly, notwithstanding the government's expenditure restraint, due to the impact of the severe growth slowdown on revenue, the fiscal deficit and public-sector debt ratios.

Increased costs, weak demand and intense competition could also squeeze Indian automakers' profitability, although they appear to be taking a disciplined pricing approach so far.