Slump hits India's car industry , Car sales down 19%

by Sanjay Jha | December 9, 2008 at 11:55 pm

174 views | 0 Recommendations | 0 comments

The Indian Automobile industry has become the first sectory to be deeply affected with the economic downturn. Indian automobile sales have declined by one fifth , its worst ever in the last eight years.

Indian governement has cut the key short term lending rate by 250 basis to rejuvenate its sagging economy. Due to recessionary trend Indian economy growth is likely to be contracted to 7 percent compared to 9 percent last year.

According to the figures released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales in the country during the month was down 20.24 per cent at 4,31,171 units, against 5,40,553 units in the corresponding month a year ago.

Total two-wheeler sales in November also dipped 14.68 per cent to 5,67,502 units compared with 6,65,181 units in the same period last year.

Commercial vehicle sales decreased last month to 20,637 units from 40,879 units in the year-ago period, a fall of 49.52 per cent, SIAM said.

Indian automobile market has been growing very rapidly for many years and all major automoile company had lined their expansion plan for this region. But slump had forced many of them go slow on their expansion spree. Indian government had reduced taxes to boost car sales and car makers have cut down the prices.

Nissan, which is reviewing its current expansion strategy, said it would cut investments to improve cash flow.

The two partners plan to open several local factories in partnership with Indian manufacturers.

But Nissan has warned that it will reduce or delay production in some plants to meet falling demand.

Japan's third-largest carmaker said it still wanted to start car production together with Renault in the first half of 2010, as scheduled, at a plant in the southern city of Chennai.

But the factory, which is expected to reach full capacity of 400,000 cars per year by 2015, will start with just one daily shift, instead of two.