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Authors: Preetha Suresh
Published by: Amity Research Centers
Published in: 2019

Abstract

India, the world's fourth largest car market, saw the industry slump into a major crisis over the last few quarters. The industry closed 2017-18 with a 14.2% year-on-year growth but slowed down to single digits by the end of 2018. As sales declined further in 2019, major players in the industry were forced to cut back their production level. This move had a cascading effect on the associated component and accessories sectors. Multiple factors including rising crude oil prices and a change in Government of India's (GoI) policies relating to third party insurance and increase of axle load limits for all trucks dampened the sales of new vehicles across all segments. Adding more trouble, the Non-Banking Finance Companies' liquidity crisis had also impacted the financing of new vehicles. In such scenario, changing consumer sentiments and the GoI's move to follow global trends in terms of cleaner and pollution free cities through electric vehicle mobility further contributed to declining sales. As manufacturers of the internal combustion engine looked at an uncertain future, strategists in the industry realigned future businesses through acquisitions, alliances and investments into new technologies and new modes of transport. As the traditional auto industry looked at job losses in millions, the GoI started initiating various measures to maintain the growth momentum. However, market analysts wondered if the industry could overcome the negative sentiments and ride back on the strength of sustainable mobility in the coming days.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Time period

The events covered by this case took place in 2019.

Geographical setting

Region:
Asia
Country:
India

Featured companies

Maruti Suzuki Ltd
Employees:
10000+
Type:
Public company
Industry:
Automobile
Ashok Leyland Limited
Employees:
10000+
Type:
Public company
Industry:
Automobile
Hero MotoCorp
Employees:
10000+
Type:
Public company
Industry:
Automotive

About

Abstract

India, the world's fourth largest car market, saw the industry slump into a major crisis over the last few quarters. The industry closed 2017-18 with a 14.2% year-on-year growth but slowed down to single digits by the end of 2018. As sales declined further in 2019, major players in the industry were forced to cut back their production level. This move had a cascading effect on the associated component and accessories sectors. Multiple factors including rising crude oil prices and a change in Government of India's (GoI) policies relating to third party insurance and increase of axle load limits for all trucks dampened the sales of new vehicles across all segments. Adding more trouble, the Non-Banking Finance Companies' liquidity crisis had also impacted the financing of new vehicles. In such scenario, changing consumer sentiments and the GoI's move to follow global trends in terms of cleaner and pollution free cities through electric vehicle mobility further contributed to declining sales. As manufacturers of the internal combustion engine looked at an uncertain future, strategists in the industry realigned future businesses through acquisitions, alliances and investments into new technologies and new modes of transport. As the traditional auto industry looked at job losses in millions, the GoI started initiating various measures to maintain the growth momentum. However, market analysts wondered if the industry could overcome the negative sentiments and ride back on the strength of sustainable mobility in the coming days.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in 2019.

Geographical setting

Region:
Asia
Country:
India

Featured companies

Maruti Suzuki Ltd
Employees:
10000+
Type:
Public company
Industry:
Automobile
Ashok Leyland Limited
Employees:
10000+
Type:
Public company
Industry:
Automobile
Hero MotoCorp
Employees:
10000+
Type:
Public company
Industry:
Automotive

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