Automakers from Mahindra & Mahindra to Ford Motor Co. are currently gearing up in India for a rebound in demand, after the once fertile automotive market was thrown out of lane by a huge decrease in sales.
After political unrest that also affected consumer demand, new Prime Minister Narendra Modi and his government are seen as a sign that demand would finally catch up, as many companies look to him to swiftly slow inflation, come up with new jobs, buoy income and investments and generally set the pace for a revival of one of Asia’s largest economies.
“Car buyers look at the economic and jobs outlooks while making decisions,” said Kapil Singh, an analyst at Nomura Holdings Inc. in Mumbai. “The initial sentiment on these is already looking up.”
One of India’s biggest car makers, Mahindra, also a producer of tractors, utility vehicles and scooters, is preparing to launch an investment plan of 40 billion rupees ($676 million) that would be used to build a new 400,000-unit-a-year production facility – even though its existing plants are still functioning at low capacity. Ford also wants to raise production capacity in Asia’s third biggest market, preparing to open a new plant in 2015, expecting a pick-up in demand and also using India as an export hub.