Despite periodic problems related to rising cost of production and slump in demand for vehicles, Indian automobiles tops the list of Indian industries that have registered consistent growth all along since opening up of the economy, accompanied by economic reforms, in the early 1990s. The auto industry is currently passing through another dull phase, visibly upsetting manufacturers of vehicles as well as components and accessories. However, industry experts keep discounting apprehension over the widespread slowdown and expect a clearer picture to emerge sooner than later.
They base their optimism on the resilience of both the economy and the auto sector to adjust themselves to exigencies. This was well demonstrated by the auto industry when it maintained the growth momentum and registered double-digit growth for three consecutive years preceding the year-long world recession of 2008 that ravaged individual economies around the world. It was also the first among Asian industries to come out of the global crisis and resume its growth career on the expected lines.
Reassured of an early turnaround and influenced by the gradual pick-up in vehicle sales, as revealed in the SIAM statistical details, the auto industry is obviously bracing for fiercer competition in the coming months.
Both domestic players and MNCs continue investing on capacity expansion and setting up of new units in expectation of a fair growth in demand. As part of their effort to boost demand, most vehicle manufacturers have tied up with banks and financial institutions for vehicle financing. They are also hopeful of a low interest regime soon.
It is in view of the expanding operations on all fronts that Western circles strongly feel that India will re-emerge a global automotive power weathering the current slowdown. The Automotive Mission Plan (AMP) has rightly projected that the auto industry’s contribution to the country’s GDP will double with its turnover touching $145 billion by 2016.
Reasonably fair growth
Of course, the commercial vehicle industry, the so-called engine of growth, has been faring reasonably well. Aggregate commercial vehicle sales during April-November 2012 rose to 5,13,802 units from 5,00,161 units in the same period the previous year. All industry players have reported a reasonable growth in sales.
In the M&HCVs segment, Ashok Leyland sold 11,812 passenger carriers during April-December against 11,317 units in the same period of 2011. Tata Motors reported higher sales at 12,149 units (12,134 units). Mahindra Navistar Automotives Ltd. (MNAL), SML-Isuzu Ltd., VECVs-Eicher and Volvo Buses accounted for the balance of the overall passenger vehicle sales of 30,756 units against 28,762 units. With regard to goods carriers, MNAL’s performance was exceptional with production reputed of 1,795 vehicles against 1,623 vehicles.
Equally encouraging was the performance of vehicle manufacturers in the LCV segment. While sales of passenger carriers moved up to 32,967 units from 32,095 units over the seven-month period, that of goods carriers shot to 3,01,861 units from 2,54,129 units during the corresponding period of 2011.