India’s domestic automobile sector suffered its worst slowdown this year as tight liquidity, high taxes and a weak rural economy have sapped consumers’ buying power.
Image for Representation (Reuters)
Suzuki Motor Corp said it was no longer gung-ho about India’s auto market, the world’s fourth-largest, where it has seen relentless growth in the past seven years. And the parent of the country’s biggest carmaker is not alone. The Japanese automaker issued the warning after it reported a slump in quarterly profit this week on tumbling sales at its Indian unit, Maruti Suzuki, which accounts for half the number of cars sold in India. “We no longer think that growth in India will be an uninterrupted move upwards,” Suzuki President Toshihiro Suzuki cautioned. Maruti’s sales, which were growing till January, has slipped every month over February-September 2019. India’s auto sector has gone into a tailspin this year as tight liquidity at shadow banks, high taxes and a weak rural economy have sapped consumers’ buying power.
Global players like Ford, Volkswagen and Fiat are already re-evaluating their strategy as they struggle to make inroads in a market dominated by small cars. “Carmakers are getting very cautious regarding their future investments in India. Most of them are either deferring or just scrapping their India new model plans,” said Puneet Gupta, an autos sector expert at IHS Markit. Auto executives and analysts point out that some carmakers are focussing on their strengths in terms of products instead of chasing volumes with small cars. Some others are taking drastic steps to reduce their exposure.