Motown's Slow Ride

The domestic automobile industry in India has endured its worst ever slowdown in history that has spared nobody.

- Sumant Banerji

FOR YEARS I THOUGHT what was good for our country was good for General Motors, and vice versa.” This is how Charles Erwin Wilson, the legendary former CEO of General Motors and US Defence Secretary after World War II, reacted to a question how he would handle a decision involving a conflict between his former company and the country.

India of 2019 could do well to be mindful of Wilson’s reply as it grapples with an automobile slowdown that is so severe that it can bring its growth story to a sorry end. With overall revenues of $119 billion that account for 7.1 per cent of the country's gross domestic product, 49 per cent of its manufacturing GDP and 37 million directly and indirect jobs, the sector has a direct bearing on the economy at large. And vice versa.

The distress in the industry, say experts, is unprecedented, if not totally unforeseen. Passenger vehicle sales declined on a year-on-year basis every month from July 2018 till September 2019. In October, there was marginal growth. It took only a little longer for the slowdown to show up in other segments. Sales of commercial vehicles, one of the barometers of overall economic growth, started declining in December last year. They have declined in seven of the nine months since then. Sales of two-wheelers, the biggest pie in the automobile industry in India, have been in the red since December. The slowdown that is on the verge of turning into a fullblown recession in the sector has not spared tractors either. After growing a healthy 18.5 per cent and 23.7 per cent in 2016/17 and 2017/18, respectively, tractor sales growth fell to just 7.8 per cent in 2018/19. In the first half of 2019/20, sales fell 14.6 per cent, matching the performance of the other industry segments.