Although in 2012 auto makers witnessed not-so-good times in the Indian auto market, the industry marked a massive investment of Rs. 22,000 crore, which was dedicated in developing new production units and increasing the existing production capacity to roll out new models. Interestingly, this sum does not include around Rs. 5,000 crore employed by the component and ancillary industries to complement the investment of auto makers, as started by senior officials of Automotive Component Manufacturers Association of India (ACMA) and Society of Indian Automobile Manufacturers (SIAM).
Expressing his views on this, the Director General of SIAM, Vishnu Mathur, said, “Although investment levels have been impacted this year by the slowdown in demand and uncertainty over the government's diesel fuel policy, overall vehicle manufacturers alone still invested more than Rs 70,000 crore in the last four years.”
Speaking on the same lines, the Executive Director of ACMA, Vinnie Mehta, commented, “The auto component industry has invested around $6-7 billion in the past four years at the rate of $1.7 billion in 2009-2010, $2-2.5 billion in 2010-11, $1.6-1.9 billion in 2011-12 and an estimated under $1billion in 2012-2013.”
The Indian auto industry got to see a sliding demand in 2012. The demand for cars increased in 2010 by more than 20 per cent, however started falling in 2011 and witnessed a steep decrease in 2012. In early 2012, the sales growth forecast of SIAM stood between 9 and 11 per cent, which fell to 1-3 per cent by the year end. Mathur said, “We may also have to re-look the commercial vehicle and two-wheeler estimates once the December numbers are compiled. Our earlier forecast was 4-6 per cent growth but that may have to be scaled down a bit.”
Industry experts believe that these figures could be higher if the slowdown has not impacted. The level of investment could be much more with better utilisation of production capacity. But as the demand came down, several investors changed their mind to postpone their level of investment.
