Automobile Industry: Trends and Prospects

Monday, May 24 2021

The automobile industry has been hit hard due to the COVID-19 pandemic and there have been widespread speculations about the evolving growth trajectory of this key industry. While the last festive season injected some cheer in the industry in respect of passenger cars and two-wheelers, the sector is once again witnessing challenges with the recent surge in the second wave of Covid-19 pandemic atrocities. What is prognostically alarming is not just the fact the numbers in terms of both infections and deaths are much higher than the last time around but that this dreaded disease seems rapidly spreading to the rural areas, where the medical and health infrastructure is woefully inadequate to meet the spike in the numbers. Evidently this disconcerting scenario has grim implications for the macro-economy in terms of the devastating hit to output, income and employment and the sectoral outlook.

What makes matters worse is the distinct possibility of a third wave of infections. This unsettling fact together with the heavy expenditure on medicines, drugs, nursing, etc. has severely impaired the disposable income of the individuals with a crippling impact on the automobile industry.

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