Slump Of The Automobile Industry

Saturday, 16 January 2021



Slump Of The Automobile Industry

Sidharth Bedi Varma | September 07, 2019 12:59 hrs

The automobile sector is down, but is it a real indicator of how poorly the economy is performing? The auto industry has made the headlines for the past few weeks about how the lack of demand is affecting one million jobs across manufacturing, distribution and dealerships across the country.

While there is a lack of demand and the economy is down, it is important to point out that the auto industry should not be a key indicator for the economy’s performance.

The auto industry has grown steadily for the past 20 years. 20 years ago, the purchase of a vehicle was seen as “making a statement.” However, this is not the case now. At the cost of generalizing, families who had one car around 15 years ago, now have 2 cars and 2 two-wheelers with them. Buying a car is today a necessity. 

Now, after 20 years, saturation would be obvious. The streets are occupied with vehicles twice their capacities. Metros such as Mumbai, Bengaluru, New Delhi, Kolkata or even smaller cities like Guwahati are living with horrible traffic conditions. Driving is no longer pleasurable, and if you ask your friends about driving in the Delhi and they would certainly add some colour to it.

Secondly, rising fuel prices, poor taxation norms and price rise altogether have only added to the woes of the auto industry. The decision of buying a car is a 5 to 7 year investment and with so many cars on the streets already, where is the space to accommodate more?

So where does the industry go from here? The auto industry must try to focus on alternative solutions which should not be limited to EVs. Auto giants can attempt to improve public transportation and making “commute” a better experience. Auto industry has long focused on selling individual units and that space is now full. It is important that the streets are made clutter-free and a more public friendly approach is opted for. 

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