Worst Performer of 2019-20

The Worst Performing Sector of 2019-20

Auto Sector on thin ice as slow down continues.

The automobile sector is one of the highest profit-making sectors in India which has given employment to an ample sheer of unemployed youth for decades. Looking towards the capitalizing potential of this sector, here entered numerous foreign automobile companies to have a share of the pie. But unlike other years for all the major players it has become an arduous task to carry on operations as this year tends to prove itself an ominous cult which is disgraced with bane for the players to play. 

Tata Nano Producing in Tata Motors factory.

From the inception of this year, there was a substantial decline and by the end of the last quarter, the all-time champion Maruti Suzuki’s sales declined up to 41.2%, Honda Motors with 38.7%, and Tata Motors to top the list with a rigorous decline of 52.3% in the last quarter. Surely is the cause behind this is the recession in the economy but cannot be the sole reason as a plethora of other reasons is comprehended alongside. Not only there is a decline in the sales figures of the four-wheelers, but this has an explicit effect on the sales of two-wheelers, tractors, and trucks too. The declined sales of two-wheeler indicate that the economy is passing through a harsh situation where it is creeping to rise but is not able to as it is generally seen that the sale of two-wheelers always rises due to the middle-class society is mostly the consumer here, but unfortunately not this year. The reasons could possibly be a middle-class man opts for a vehicle only when he foresees a growth or stability in his professional life, but with jobs cutting short this might be a reason to not to go for. Further, the decline in the sales of tractor suggests that the country’s rural halves are acutely suffering as the tractors are mostly purchased by farmers and with its value going down overtly states that our farmers are uncertain about their production as most of the places are doubtful about the rain too. Moving to the declined sales figure of trucks clearly points towards the latest alteration made to the “Axle Loading Norms” of the trucks where previously it was 16 tonnes per truck, now has been exuberantly increased by 15 to 20%. This has made the owners to full their trucks with more payloads than before, allowing them not to go for a new truck to maintain their revenues. It is also forecasted by the experts that there is a possible decline in the production of Rabi crops.

Keeping all the grumpy and grouchy visages of the economy in mind, the kind of travail auto sector is going through cannot be filled up unless firm action is taken by the government. Reducing the Repo Rate by the RBI cannot be the sole thing to do. The government should take more steps with ebullience to revive the sector because if it further dips, the retaliation would go terribly inevitable as near to 4 lakhs of people has already lost their job. Surely more will in coming days as companies are planning to cut down their production as a result of which laying off of the employees will be imminent. As of now the facade of the current scenario is to wait until the end of the current financial year 2019-20 and to look forward to seeing the necessary steps that are to be taken by the government.

Hyundai India's cars are stranded as a slump in the auto sector.