Faced with hardships
The past year has seen the auto industry face its lowest turfs after a 31% year-on-year growth in 2010-11, which had helped India emerge as the auto hub of the world. To fuel and feed local demand, many international car brands had tripped over each other over announcement of setting up manufacturing facilities in the nation.
According to Indrajit Ghosh, partner at Acell Motors, a small-sized car dealership firm in Kolkata, “With sales figures dripping drastically over the past few months, Indian auto sector has been faced with many challenges.” Most of them have caused international auto-makers dear. RBI’s persistence at continuing a high rate of interest to cut back on inflation lost many prospective buyers for the auto companies.
The Finance Ministry’s decision of giving the state-run energy companies a free run on hiking gasoline prices was also a big setback for the sector. Michael Boneham, head of Operations of Ford in India said to reporters that the government’s handling of the issue has constrained Ford’s operations.
Even though modern engine manufacturing plants are equipped to produce petrol and diesel engine simultaneously, switching completely to one would entail significant investment for acquiring necessary machinery. Also, the vast supplier base is unable to adjust to the rapid change in the industry dynamics and demand so fast.
The 65% hike in duties for companies that import car components and assemble them in India is also weighing down on most car makers’ pocket.
Priyanka Roy Chowdhury |
The mad dash to India in the wake of the successful overturns of the auto industry in 2010-11 is costing many global automakers dearly now. Faced with many crippling factors like internal inflationary pressures and skyrocketing interest rates, India’s auto sector has lost its former sheen. In the bargain, international automakers have emerged as the biggest losers. 
