AUTOMOBILE SECTOR AT A BOOM

Vijay Gupta. Dated: 11/28/2020 1:18:46 PM

Post the series of lockdowns throughout the country, quite evidently the situation was predicted to be filthy and miserable, filled with the highly inflated crime rate. With a crumbling economy, given the negative growth experienced in the first quarter of the financial year, everything seemed to be downright ugly in the near future every way possible. However, the situation revived back to normal and even managed to surpass everyone’s expectations with a rapidly inclining graph making fresh peaks every day. Besides the pharmaceutical and FMCG industries, every other sector seemed like it was doomed towards a great fall, diving the economic charts into deep dips every other day. Yet this turned out to be wrong for the better as besides the tourism and its related sectors almost every other sector and industry is experiencing a fresh rise in its charts conceptualising new peaks every day. The automobile sector is also a part of this wave-making fresh peaks throughout its charts, witnessing record-high sales post lockdown. The high sales record has been evident from figures like twenty thousand bookings in seven days. Though 2019 was a harsh year for the entire automobile industry with hiked taxes and duties imposed on the manufacturers as well as consumers, 2020 turned out to be a rather fruitful year for this sector as a whole. Although multiple lockdowns did hinder manufacturing and sales in this industry, the sales recorded pre and post lockdown has more than covered up for it. Prominent manufacturers like Maruti Suzuki, Hyundai, Mahindra, Tata and numerous others booking higher profits this year, given the unexpectedly high sales figures. Thus eventually leading to higher production capability and increment in the export figures as well. These record sales have been overwhelmingly high for some manufacturers. The head of Skoda India sarcastically advised buyers to order cars from other companies as they had recorded bookings beyond the capacity to manufacture at its plant in India, given the waiting time of about two months. Shareholders are equally delighted with higher returns and the steep rise in the share prices of such manufacturers, given the high return on equity earned by these companies through these times. All of this may seem to have undermined the effect of the pandemic and the subsequent lockdowns. It may have also signalled that we might have wrongly underpredicted the market and economy in general, given the strong feeling perceived amongst consumers at present.

 

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