Global Recession Hits Indian Auto Industry

Global recession has devastated the global auto industry with pinching effects on the Indian auto industry. India is a strong and growing economy but the hit of recession has put red marks on the entire balance sheet of the Indian economy.

Among the leading car manufacturers, General Motors and Ford were the first one to file for bankruptcy. GM is struggling to stay alive and claims that the company has just enough cash to continue its operations. Even the merger talks of GM and Chrysler have been officially brought to a halt because of the liquidity crunch.

U.S sales have fallen down by 32% which has directly affected the Indian car industry where GM has recorded a fall of 45%, Ford of 30% and Chrysler down by 35%. All the three major car manufacturers have reported declined growth after the hit of recession.

After the industry experienced a heavy fall in the month of August due to inflation, September proved to be a promising month with things setting out at the right place. Then again the market went in the negative terrain swayed by the wind of recession.

October usually is considered to be the best month for car sales because of the festive season. Unfortunately, this year it proved to be a curse for the Indian auto industry. At one end of the spectrum, car manufacturers like Tata Motors, GM, Hyundai, Ford, Renault, Mahindra, and Maruti Suzuki are investing huge amounts to establish new production plants and line up launch of car models. At the other end of the spectrum, SIAM has cut down the growth forecast of automotive sales from 12.5% to 9.5%.

This initiative taken by SIAM further forced few car manufacturers like Tata Motors and Maruti Suzuki to cut down their production which further took away the job of almost 300 workers. Even Mahindra-Renault reduced the number of production units of their Logan.

In addition, the severe liquidity crunch in the U.S market has also forced many of the car buyers to cut upgrades to bigger cars and many are pushed back from buying new cars. With deteriorating car sales, even production has gone down to a great extent, which has eventually put a negative impact on the auto component industry.

In October, overall car sales declined to about 9.05% over October 2007 and the car production fell down to about 12.32%. Further to that even the month of November was not successful in bringing some charm to the industry. Infact, November recorded the steepest fall in car sales in the past five years.

Maruti Suzuki recorded a fall of 27%, Mahindra & Mahindra recorded a fall of about 40%, and Tata Motors showed 12% decline in the car sales.

It is also said that the recent Mumbai terror attack and the cyclonic rain in South India have added to the woes of Indian car manufacturers.