Major Setback in Auto Industry

As we see the auto industry is hitting a major setback, many of the auto giants are halting their production. Do you think that the electric vehicles are going to change the buyers perception? Looking at the Indian auto industry, companies like Tata Motors, Hero Honda, Maruti Suzuki, Ashok Leyland have done their interim closure of production units. What exactly is the cause for slowdown in Auto Market? This crisis is not only in companies those produce cars &  luxury vehicles but it is also in the companies which produce utility  vehicles, two wheeler, farming machinery like  tractors, this is because of the several social challenges and natural disasters.

                                     

Of course this situation is making the traders to “hold” than “buy” or “sell” leading to confused status in market. However, there are 1 or 2 domestic debt free companies which have diversified their segments are quite optimistic and are able to maintain their margins.

Here are few basic problems impacting the auto industries.

• Increased fuel charges
• Recent natural calamity
• Use of public transportation (Metro, Subways)
• Road conditions
• Use of bicycles
• Work from home
• Online shopping

There were several interesting economic challenges as well.

• Demonetization by government
• Liquidity crunch due to NBFC crisis
• Tax burden
• Low government revenue