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India’s Auto mobile Industry



The automotive industry is often seen as a proxy for a country's economy. Nowhere is this truer than today in India. The economy is slowing, mainly due to external problems.Protests and agitations undermine the government's determination to the next phase of the reform measures to be taken. Policy-making almost to a halt. Inflation is galloping: Food inflation was 9.47% for the week ending 3 September, a shade lower than 9.55% the previous week.
However, a few bright spots exist. India is one of the few major economies that are growing. When the appetite for risk returns, institutional investors from abroad flocked to come back. Exports have performed well, U.S. $ 24.3 billion, the export of 44.2% in August over the corresponding month of 2010. Part of this increase is due to the base effect - exports was in the doldrums in August 2010. 

However, services exports in July 2011 (the latest month for which data are available) from U.S. $ 11.04 billion in June to U.S. $ 10.40 billion. This reflects the slowdown in IT spending in Western markets.
As for the car industry, the country's largest car manufacturer - Maruti Suzuki India - has closed its plants in September 16. This follows the worker protests over a "good behavior" bond that Maruti management insisting that they sign. Earlier in the week, 11 supervisors struck by the agitating workers. With the government to force the two sides to the table, a solution is likely to soon find a similar ceasefire was enforced in August.But it may not end the industry's problems. The unrest, which started in Maruti's Manesar plant in Haryana, near Delhi, has spread to other units for Suzuki. More disturbing is the impact of the industrial units in Gurgaon (Langebaan) industrial belt.Maruti will miss the bus to the festival season beginning next month. But other car manufacturers are unlikely to be much to celebrate finding. According to figures from the Society of Indian Automobile Manufacturers (Siam), passenger car sales fell from 160,000 units in July 2011 to 144,000 in August. The July number was itself 16% lower in June.

"Car sales have slipped back into the local market, as high interest rates and the sharp rise in petrol prices weighed heavily on the question," reported a few days ago. "Now that the festive season to come, we hope to see some courage. But it's only a hope," said Vishnu Mathur, Director-General to Siam, the Newsindia.
That hope may prove false. On 15 September, the government has the price of gasoline. (Gasoline is a price-controlled item in India.) Effective from September 16, gasoline costs 25 U.S. cents a U.S. gallon more in New Delhi. (The rate is slightly different in other cities.) Gasoline now costs about U.S. $ 5.2 liters in the capital.
A few hours later, the Reserve Bank of India (RBI) has acted in ways that the industry could be further hurt. RBI raised interest rates by 25 basis points (100 basis points equals 1%). Auto finance companies will inevitably pass this on consumers (although some may keep prices in the short term as a competitive measure). This means that fewer cars rolling out of showrooms.
From another perspective, things to look for the car industry. There was a spate of new launches - the values ​​of Renault, the third generation Swift and the luxury Kizashi of Maruti, the Verna from Hyundai, the brio of Honda, the Liva of Toyota, the Fiesta, Ford, and the Passat from Volkswagen. In addition, luxury car makers saw several launches.Another statistic: exports in July to 48,000 up to 40% over the corresponding month last year.
The new companies to make investments. But even the established players think about the expansion. The currently beleaguered Maruti Suzuki is increasing in U.S. $ 1.25 billion in new plant, the site still to be decided. According to Siam estimates, the Indian automobile industry with the auto components business to invest U.S. $ 30 billion in the construction of new capacity in the next four years. It's a recession that any industry would like to face.

                                                                                                 

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