Indian Auto Manufacturers

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Key Trends and Forces

Economic slowdown resulting in adverse impact on the sales

Automobile industry is a cyclical industry. It is substantially affected by general economic conditions. The demand is influenced by factors including the growth rate of the economy, easy availability of credit, increase in disposable income, interest rates, freight rates and oil prices.[1] Lack of vehicle finance availability, lower growth on GDP and/or increases in fuel prices lead to a decline in the demand for automobiles. The Indian economy has shown a sharp decline in GDP from 7.1% in the 2nd quarter of FY2008-09 to 5.3% in 3rd quarter of FY2008-09.[2] The decrease in freight rates due to slowdown of economy also leads to decrease in demand for commercial vehicles as expansion of fleet size is stopped. The freight rates dropped by 9.4% in 2008.[3] Despite the 62% decline in the international gasoline prices, the gasoline prices have dropped by only 10% in India.[4] All this factors have affected the sales of Ashok Leyland. In Feb 2009, the sales dropped 57% as compared to that of Feb 2008.[5]

Companies in the Indian Auto Manufacturers Industry (7)

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