Hi I am Souranil and today I am writing my second blog, today the blog is all about the automobile industries in India and it’s recent performance.
Introduction
Before starting with the sector’s. slowdown there is a brief idea about the automobile sector in India how does it perform.
India became the fourth largest auto market in 2018 with sales increasing 8.3 per cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of commercial vehicles in 2018.Overall domestic automobiles sales increased at 6.71 per cent CAGR between FY13-19 with 26.27 million vehicles getting sold in FY19. Domestic automobile production increased at 6.96 per cent CAGR between FY13-19 with 30.92 million vehicles manufactured in the country in FY19.
In FY19, year-on-year growth in domestic sales among all the categories was recorded in commercial vehicles at 17.55 per cent followed by 10.27 per cent year-on-year growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. During January-September 2018, BMW registered a growth of 11 per cent year-on-year in its sales in India at 7,915 units. Mercedes Benz ranked first in sales satisfaction in the luxury vehicles segment according to J D Power 2018 India sales satisfaction index (luxury).
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18.
Now what happened to the sector that there is a sudden slow down right from the first quarter of the 2019 financial year?
The blog is all about that, if we could see the Indian Economic policies and other policies they have always targeted the automobile sector, there is no doubt that they have been imposed for the benefits of Indians. These are as follows:
Uncertainty of Diesel in the BS6 era:Whether carmakers upgrade existing engines to meet the upcoming BS6 emission norms or make new ones, it is a big investment. The extra cost will undoubtedly be borne by the customers as well in the prices of the final product – the car. Majority of the car were sold in diesel variants so this gives the total car sales volume a big blow
Emissions of BS6 norms and safety features were imposed on the successive years: Indian Government imposed mandatory safety features of airbags and ABS which added up the manufacturing costs of the entry level cars and immediately after one year again for the increase in pollution govt has ordered the automobile manufacturers to manufacture the engines upto BS6 norms and these resulted in a huge increase in the manufacturing price and obviously these burdens will be carry forward towards the buyers
Uncertainty around the BS6 norms: People are quite confused regarding the BS6 norms, people have thought that after April 1 there cars won’t work with the fuels but it’s a small comfusion around the people that the fuels standard will be also upgraded and that won’t work with their vehicles and this is creating a small confusion and restricting buyers from buying vehicles and thus results in sluggish growth.
Corona Effect: Then there is corona and due to lockdown, sales of automobile sector has almost stopped and thus the sectors are facing huge loss due to this.
There are many more reasons like GST and liquidity crisis which are also affecting the sector but we hope that once India gets over from this deadly virus it is expected that the automobile sector will also get over the slowdown which it is facing currently..
souranil98 