Re: Study of the recession in the Indian car market The auto industry in India is not driven only by the salaried class, so interest rates and changes in macro conditions that affect credit only affect a small portion of the demand. That is maybe a bit different from other economies. Take all the launches in the past 1 year and compare the promised (not real) delivery schedules. Each good selling model on a average has 4 - 6K dispatches a month, yet the waiting periods which is a proxy for demand given the constant fixed supply is 10+ months.
So demand seems to be strong, this is dispite all other growth metrics, and indicators. We are a very insulated economy. The only thing that swings directly with the global indicators is the equity market, since that has the maximum direct exposure to foreign money and interest policies.
The last downturn was economic cause driven, the effects were deep, were felt a little in India too, but not as much as the mature economics. There is a lot of what is called the rubber band effect in our economy. The money flow is controlled by more than just demand here. Govt, buffers, freebies, lax taxation implementation, cash economy, local credit, huge unorganised labor market, subsidies etc, all ensure that each rupee hop is not function of last source plus a predictable function controlled by interest rates, fiscal policies etc.
Surely, those sectors exposed to funding like PE, VC, Corporate loans are feeling the heat, but together they form a tiny factor in the economy. They make big news, but little effect on the local economy.
I haven't heard on anyone in my circles yet, that is postponing their car buying decision due to a recession. What I have heard is they are postponing because they are not able to get what they can pay for. |