fading fast. Although automakers saw its sales of nearly a decade wipe out over the past year, they were expecting a bounce back in demand in 2021. Yet, industry experts claims that this recovery in the market will likely be led by small and affordable cars, a sector which is dominated by a few home-grown leaders such as Maruti Suzuki and Hyundai. This has been reaffirmed by the significant fall in sales of some of the premium models manufactured by foreign carmakers than originally expected. This means that automotive giants like Ford, Nissan, Honda and Volkswagen have to make certain difficult decisions about their future investments in the South Asian nation.
India already saw General Motors and Harley-Davidson close shop last year. Now, the remaining international brands are expected to decide if they are to continue operations depending on the cost benefit analysis of other international markets, and according to experts, the outlook on this remains grim.
Ford India’s managing director Anurag Mehrotra told Reuters that the car market in the South Asian nation had not grown as projected as the pandemic continues to hurt domestic sales and exports. “The uncertainty in the long-term growth prospects of the auto industry and economy have resulted in serious challenges, including capacity utilisation,” he said. According to Mehrotra, carmakers have to make some “tough decisions” as the pandemic demands “agile solutions”.
Back in 2010, India was widely expected to become the world’s third-largest car market within a decade, with the US and China at top 2. However, years of high taxes on premium models have disproportionately affect foreign automakers. This, along with the economic slowdown in 2019 and the effects of the pandemic last year have held India back at No. 5 on the list.
