Triple Saturation: Raison d'etre of Automobile Industry in India

7 Pages Posted: 19 Aug 2019

Date Written: August 15, 2019

Abstract

This paper discusses new dimension of ailing Indian automobile industry. Automobile industry in India is witnessing nose dive decline in 2019. The trend indicates that since last three quarters, each segment within automobile sector is passing through its worst time in history. Till 2017 India's huge car market was booming and global players were rushing to invest. Since turn of 2019, the automobile sector has been slammed into reverse. India had been a bright spot for carmakers until recently, with annual sales of passenger vehicles rising by about 33% over the past five years. Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It's the ninth straight month of declines and the sharpest one-month drop in more than 18 years, SIAM Director General Vishnu Mathur told CNN Business. Several economic, technical, social, financial, legal and political reasons are attributed to the current slowdown in automobile industry. Though the reasons cited by pool of experts and policy makers are relevant, we argue that fundamental reason of deep and prolong slowdown is utility, physical and financial saturation in automobile market (macro) in general and at consumer level (micro) in particular.

Keywords: automobile, slowdown, economic, financial, physical, utility saturation

JEL Classification: D00, E00

Suggested Citation

Sapovadia, Vrajlal K., Triple Saturation: Raison d'etre of Automobile Industry in India (August 15, 2019). Available at SSRN: https://ssrn.com/abstract=3437594 or http://dx.doi.org/10.2139/ssrn.3437594

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