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Automobile industry faces bleak future

INDIA’S automobile industry may face a sluggish growth in the next three years if one were to go by the projections made by the country’s largest car manufacturer, Maruti Udyog Ltd. 

Maruti has reduced its manufacturing forecast to four million units for 2015-16, down from the five million it had projected earlier. It has decided to maintain its current market share of 40 per cent and remain the major player instead of chasing a 50 per cent target to become the dominant player.

The scaled down forecasts arise primarily from what Maruti Chairman R C Bhargava claims is the lack of a political will on the part of the government to unveil another round of reforms to revive economic growth. No bold reforms could be undertaken for fear of lack of support from some allies such as SP in UP and DMK in Tamil Nadu ahead of the assembly polls that were held in these states.

“If there is no stable government at the Centre even after the 2014 general elections, India is likely to have just a single digit growth till 2016”, says Bhargava. There are enough political parties that could block any sensible economic measure that may come up, he lamented. 

Car sales have hit the skid row in the domestic market in India probably due to the high interest rates making car loans dearer. 

Buyers are waiting for lending rates to soften to buy new vehicles. India was touted as the second largest hub for the manufacture of small cars and even projected to be the largest small car manufacturer of the world till date. The euphoria on which the automobile industry was riding on projections that five million cars would be sold by the middle of this decade is wearing thin. 

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