Challenges For the Auto Industry in India

Auto-Industry-in-India

The auto industry in India can be said to be a bellwether of the country’s economic growth. Auto industry refers to all those small and medium scale manufacturing sectors that have direct or indirect contribution to the growth of the Indian economy. The auto industry in India has an output worth about $26 billion dollars and is expected to touch $35 billion dollars in next three years. The auto industry in India can compete with world leaders in terms of volume output, workforce and technology. It has to work hand in hand with the central and state governments to increase by at least 10-12 percent per year over the next ten years, and all the more significantly, improve its sustainability.

The auto industry in India needs a lot of focus and devotion like any other service sector. It needs a proper policy and a comprehensive commitment towards reaching the targets set by itself and its partners. The auto industry in India needs a sustained focus on four key issues.

Growth in the domestic market. The auto industry in India has not yet been able to cross the critical point of penetration into the Indian consumer market. According to analysts, only around 20 percent of the Indian population uses auto vehicles. In the forthcoming months and years, this percentage is expected to rise. If you look at the past, the first few years after an introduction like fy 21 were pretty tough for all the service sectors.

Value Chain Analysis. Automakers and OMTs need to have a strategy that will help them align their activities across the value chain. They should be able to understand the complexities of the value chain and how it can help them to improve productivity. With the introduction of the automobile manufacturing unit, Indian automobiles got a new lease of life. However, it was very difficult for OMTs and other stakeholders in the auto industry in India to remain aligned across the supply chain.

Financial Crises. The global economic crisis has had a negative impact on the Indian economy in many ways. However, one of the biggest hit was the finance companies. A number of financial institutions, including banks, have lost a significant amount of money. If you consider this scenario over a period of time, it is obvious that the demand for automobiles in India will surge upwards.

Global Demand. The auto industry in India benefited a lot from the global recession. In fact, the last year saw a 15 percent increase in the production of cars and light vans in India. Industry watchers believe that the GVA (Gross Vehicle Value) of the auto industry in India will grow faster than the average rate over the last five years.

Stronger Consumer Polices. The Indian government has taken strong steps to ensure better business conditions for automobile manufacturers in India. The state government has strengthened the laws governing the import and export of goods, including automobiles, enhancing the security of the Indian car market and reducing the risk of financing defaults among the lenders.

These are some of the factors that have led to the increased demand for automobiles in the Indian economy. Auto Industry in India is expected to witness continued and increasing growth in the coming years. The auto industry in India has already experienced an upsurge in the past few years. Now, with robust economic growth, the demand for automobiles in the Indian economy is expected to keep growing at a faster pace.

The recent financial crisis in the United States has had adverse effects on the auto industry in India. However, India is not facing a financial crisis as such. The Indian car manufacturing industry has continued to work regardless of the global economic crisis. The reasons behind this are that most of the car makers have not yet received the orders or contracts from the clients who have stopped buying new vehicles.

Automobile companies in India have also started to evaluate the value chain of their products and processes. In India, the auto industry has started to address the issues related to the value chain. This has led to increased competitiveness and the ability to deliver products within the customer’s budget. Some of the major car makers have already started to focus on improving their customer satisfaction levels and addressing the value chain challenges.

India’s domestic car manufacturing industry is gaining momentum. With Chinese manufacturers on a rise and Indian car makers focusing on quality and value, the Indian automotive sector is definitely looking towards the future. With Chinese manufacturers aggressively penetrating into markets like Mexico and Vietnam, Indian imports of cars from China are expected to surge. Moreover, Indian car manufacturers are looking towards exporting their vehicles to these parts of the world.

Author: Manish Blogger India

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