Auto makers eyeing huge investments despite slowdown in Indian market

author image CarTrade Editorial Team
Friday 21 June 2013, 12:18 PM

A number of overseas auto makers are employing massive investment in the Indian auto market, in a hope to revive their dwindling sales. Key players like Ford Motor Company, General Motors, Suzuki Motor Corporation and Renault have already witnessed not so good times in the European market and thus, are foreseeing a ray of hope in India. It must be noted that although the passenger car sales in India have reduced for the seventh consecutive month during May 2013, industry experts are looking for a rebound in later part of this year.

The height of optimism is so high that the car makers are also planning to base their production hub in the Indian auto industry than United States and Western Europe as the cost of production is low here. On this, the Chief Executive Officer of Ford, Alan Mulally was quoted as saying, “We are going to be continuing to export more and more vehicles from India because India is so competitive and the vehicles here are so representative of the vehicles that people want around the world.”

Reportedly, India is transforming into a production hub mainly because of small cars and compact Sport Utility Vehicles (SUVs). Considering the For the American auto maker, Ford, the company manufactures its Figo hatchback, Fiesta and Classic sedan, and Endeavour SUV at its Chennai unit. As of now, the auto maker is planning to inaugurate a second plant in Gujarat by the end of 2014. Reportedly, the company has employed $1 billion in its unit. It must be noted that General Motors already has a unit in Gujarat and the Japanese auto maker is anticipated to start establishing the same in the state.

The Automotive Practice at Ernst & Young in India, Rakesh Batra is of a view that, “We expect interest rates to come down during the second half of fiscal 2013-14, and improved economic growth will result in vehicle sales picking up momentum resulting in a moderate forecast growth for passenger vehicles of around 1 per cent to 3 per cent for this fiscal year.” He further said that the sales of Sports Utility Vehicles (SUVs) are expected to increase by 15 per cent to 18 per cent before the end of this fiscal.

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