R C Bhargava, chairman of Maruti Suzuki, doesn't believe that India's auto sector is grappling with recession. The current slowdown, according to him, has nothing to do with the fundamentals of the economy. The China-US trade war and volatile crude oil prices may have led to a transient demand slowdown. Along with the rest of the economy, auto sector, too, tends to slow down a year before the elections as people defer purchases and investments until the final outcome is known, and it picks up the pace soon after. The past data shows that in 2008 and 2013, the years before the general elections, car sales dipped substantially, and 2009 and 2014 saw a sharp rise in sales.
Shared mobility, as many believe, is not the reason for the slowdown. On the contrary, it has increased the extent to which people ride in cars. As Bhargava rightly pointed out, India's auto sector has a long way to go. There are about 25 cars per 1,000 people in the country as against 800 in the US, 500 in Europe and 150 in China.
As against other major markets that are highly saturated, India will remain the fastest growing car market for many years to come. Crucial for the growth will be the right policies for the sector and an expansion of road infrastructure in the country. Big reforms will definitely boost consumer demand.
