Slowdown Effect on Auto Industary

All around us, there are signs of a slowdown and the plight of the auto sector, as we have stated time and time again, has been the worst. Truck majors Ashok Leyland and Tata Motors have had to resort to various ways and means to prevent pile up of inventory. Overall the picture looks very dim for the sector, yet, unmindful of all this, using this current low as an opportunity, despite mounting troubles and losses in USA, General Motors is going ahead with its plans for India. It plans to introduce two new cars in 2009 - the premium Chevrolet Cruze sedan and a new compact car priced under its Spark model. The Spark will compete head-on with Maruti's M800 model in terms of price.


Infact the company has started production at its second Indian plant at Talegaon in Maharashtra and is also going ahead with an investment of $210 million investment at the plant. These plans of GM took all by surprise as it was generally assumed by all that given the financial crisis which GM is going through in US and the overall slowdown, at a time when all are cutting down production, the company would have scuttled all the expansion and launch plans. But it is reassuring to know that it’s sights on India remains clear. This down turn in also a cycle and one can only go up from here. So when the upturn comes, it makes to sense to have the entire arsenal ready to capture the markets. A good strategy but difficult for many to follow right now as liquidity is a major issue and expansions is the last thing on the mind!
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