News / Asia

India’s Auto Industry Hit Hard by Lagging Economy

India’s Auto Industry Hit Hard by Lagging Economyi
March 27, 2013 11:43 AM
In India, car sales are expected to fall for the first time in nearly a decade. VOA's Aru Pande has more on how India's slowing economy is hurting an auto industry that was once a top choice for global companies looking to expand.
India’s Auto Industry Hit Hard by Lagging Economy
Aru Pande
In India, car sales are expected to fall for the first time in nearly a decade.  India's slowing economy is hurting an auto industry that was once a top choice for global companies looking to expand.

New Delhi resident Rajesh Kumar could not think of a better time to replace his 10-year old Hyundai Santro.

"The price is right, the sales people are also very good. And I am buying a car this month because it’s the [Hindu] religious festival of Navatri," he said.

For those in the market for a new car in India, this could not be a better time, as dealers are offering discounts to get people in the door.

Sales in the world’s second fastest growing automotive market are expected to post their first annual decline since 2003.

The Society of Indian Automobile Manufacturers says the industry will miss all growth targets this year, noting that the sale of passenger cars was down 12 percent in January compared to the same period last year.

Sharad Mehra owns four auto dealerships in and around New Delhi, including this Hyundai showroom in Gurgaon.  He says the stagnant market has his employees working harder for a sale.

"Earlier, what used to happen is we used to sit in the showrooms and wait for customers to come in, walk in - we used to try to convert that.  But now, they [sales people] are all trying to go out, go and reach the customer. The customer gives a call, we try to go out to him," he said.

Rajiv Kumar, with India’s Center for Policy Research, says the steep fall in car sales reflects the frustration and despondency of those most affected by India’s slumping economy. 

He says people are finding it harder to make aspirational purchases, including upgrading from owning a motorcycle to a car.

"As long as your car sales were growing, it represented the growth of that middle class and its aspirations and the fact that it could meet those aspirations," he said.  "Now it’s not happening," he said.

Analysts say the economy’s effect on the auto industry is far-reaching.  Major foreign automakers, like Ford, Suzuki, and Hyundai, have invested billions to build up operations in India and are now having to reassess their growth models.

Domestic manufacturers of auto parts are looking outside India for business, and steel companies are also feeling the pinch.

With interest rates at more than 12 percent, dealers and customers like Rajesh Kumar say the government can take steps to help bring sales back up.

"The government keeps increasing the interest rate, if they reduce it a little bit, then the public will benefit and more people will buy cars," he said.

While automakers wait for urban sales to recover, many are looking to take advantage of what many see as India’s untapped rural sector.

You May Like

Video In US, Columbus Day Still Generates Controversy

Holiday marks date Columbus discovered Americas, but some are offended by legacy because he enslaved many natives he encountered More

Video Through Sports, Austria Tries to Give Migrants Traction

With 85,000 people expected to claim asylum in Austria this year, its government has made integration through joint physical activities a key objective More

Video Kickboxing Champion Shares Sport With Young Migrants

Pouring into Europe by hundreds of thousands, some migrants, especially youngsters, are finding sports a way to integrate into new host countries More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs