Automobiles

Indian automobile industry is one of the key drivers that help the country to keep its growth engine running.

- 

The sector contributes 7.1 per cent to the total Gross Domestic Product (GDP). India is also the largest manufacturer of two-wheelers, three-wheelers and tractors in the world, and overall, the fifth largest vehicle manufacturer. The industry has four main segments, namely, passenger cars (PVs), commercial vehicles (CVs), three wheelers and two-wheelers. Among these, two-wheelers dominate with domestic market share of 81 per cent during April-December period of FY19, followed by PVs with 12 per cent share and CVs with 4 per cent share and three-wheelers 3 per cent market share. In recent times, the auto industry is going through turbulence due to weak demand and declining sales of auto companies. In June 2019, the sales volumes of all segments, viz. passenger vehicles (PVs), commercial vehicles (CVs) and two-wheeler slid to double digits.

The slowing economic growth, continuing liquidity crunch, rural stress, etc. have resulted in the decline in volumes. Axle-load norms also added to the woes to auto players which impacted new truck sales. Further, an introduction of new ABS/CBS norms has resulted in higher input cost which, in turn, led to higher ownership cost which affected sales. The weak agricultural demand owing to delayed monsoon and lower Kharif sowing impacted the tractor sales. Owing to the muted demand, many auto producers have slashed their production to reduce high channel stocks and align supply with demand.