.

2. IMPACT OF GDP ON AUTOMOBILE
INDUSTRY
 Direct correlation between GDP and automotive
industry.
 High growth economies requires better means of
transportations.
 Future of Indian automobile industry: 12% to GDP
from current 7% and 6.5 Crore additional jobs
from current 3.2 Crore.

3. MAJOR REASONS BEHIND THE
SLOWDOWN IN THE AUTO INDUSTRY
• Dramatic default by IL&FS
• 30% percent weightage to slowdown
NBFC crisis
• Significant decrease in demand in rural areas
• 20% percent weightage to slowdown
Decline in
demand
Increased
acquisition cost
• Demand is shifting towards pre owned car due to
low cost.
• Increased availability of rental cars.
Second hand
vehicles
• high insurance cost coupled with the
introduction of GST
•10% weightage to slowdown

4. • The unemployment rate is projected to trend around 6.40 percent in
2020.
• When there is high unemployment rate, the personal disposable
income of those who do not have a income source reduces and hence,
the consumption decreases.
• This decrease in consumption affects the automobile industry
adversely as the demand for the vehicles reduces in the economy.
• People who are not able to afford necessities will not even dream to
buy a car.

5. LOAN RATE
 Interest rates affect
automobile industry and
hence car loans
 Rising rates avoid customers
from borrowing
 Depreciate the value of
money and reduce
purchasing power
 Thus, aggregate demand
falls when loan rates are
high in an economy

6. • Taxation is one of the major factor that affects
automobile industry.
• The high tax on fuel encourages consumers to shift from
private vehicles to public transport which reduces the
demand for private vehicles in the economy.
• GST rate on cars is 28% that applies to motor vehicles
including those for personal as well as commercial use
which also affects the demand of these vehicles.
• All in all, taxes have an inverse relationship with demand
of automobiles.

7. Exchange Rate
 Exchange rate is the value of one nation’s currency
versus currency of another nation.
 If there is a depreciation in the value of rupee it will
make exports cheaper ,and will make imports into
India more expensive.
 If there is a appreciation in the value of rupee it will
make exports more expensive ,and will make imports
into India cheaper.

8. INFLATION
 India being a developing economy automobiles
are considered a luxury good hence in case of
inflation the consumer behaviour changes.
 Due to rising cost for manufacturers the cost of
car also goes up.
 New Safety regulations inflicted on the car
industry are contributing to inflation increase
and pushing up rates of car finance.

9. Slowdown Saga BS-VI
 Come April 2020, India will
upgrade to Bharat Stage
VI(BS-VI).
 Most advanced emission
standard for automobile.
 Industry estimate shows a
price rise of 1-3% for BS-VI
petrol vehicles and 5-10% for
diesel ones.
 BS-IV Inventory pileup and
Demand uncertainty -
challenge for automakers.

10. Electric Vehicles

11. THANK YOU