The Indian economy has hit a rough patch for quite some time now. And one industry that seems to have been severely hit is the auto sector. Be it a weak demand scenario, labor issues, high interest rates, inflation or rising fuel prices, the industry is facing challenges on multiple fronts. The slowdown is quite evident in the monthly sales volumes numbers. As per the data from the Society of Indian Automobile Manufacturers (SIAM), the domestic car sales volumes in April 2014 declined 10.2% YoY. This is the steepest monthly decline in the last one year. As per SIAM, this is the longest period of slowdown in the domestic auto market. What is even more worrying is that no incentives seem to be exciting consumers. Even the excise duty cut has failed to revive demand.
This is an industry highly linked to the economic growth rate. So a change in fortune will depend upon bigger policy changes like roll out of Goods and Services Tax, mining reforms, interest rate scenario etc. While a new business friendly Government may help the industry turnaround, we believe it will take some time before the auto industry makes a comeback.
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