News / Asia

India’s Auto Industry Hit Hard by Lagging Economy

India’s Auto Industry Hit Hard by Lagging Economyi
X
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

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid