Wednesday, August 11, 2010

Indian Car Market: A Tough Period Ahead?

Indian car market is experiencing huge growth this year and it is really encouraging for the car makers who are now planning to get the best out of surging economy of the country. July sales of Indian car market shows 38% year-on-year growth as the total sales unit rose to 158,764.

Most of the leading car makers like Maruti and Tata Motors have seen excellent growth in sales. However, there are some concerns over the sustainability of this growth.

Alike many other car markets across the world, Indian car market was also hurt by the economic recession couple of years back as Indian middle class suffered from the credit crunch. However, economic recession has got over and the private finance companies are much more active now.

Moreover, India’s current economic growth is 8.5% which also contributed to surging demand. However, it seems car makers would find it pretty hard to continue the current growth as Indian government is planning to increase the interest rates of credit.

Another problem that manufacturers are facing is lack of production materials. Demand is very high, but still many car makers can not operate at full capacity due to component shortage. So, it could also be a constraint in keeping up the growth rate.

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