The Indian automotive industry has not seen the same sharp downturn in sales as witnessed in other markets, such as the US, which has been calling the viability of many long-established vehicle manufacturers into question.

However, this does not mean the country has managed to escape the global economic crunch unscathed.

The Indian automotive industry did well until October last year, when sales started to taper off substantially. However, consumers started to return to the market in February, notes Mahindra & Mahindra automotive sector president Dr Pawan Goenka.

"It picked up again, because of government support."

Goenka says substantial cuts in the interest rates - from roughly 20% in October last year to the current 10% to 11% - have aided the industry substantially.

The Indian new vehicle year runs from April to March, and Goenka says passenger car sales still managed to end marginally up on the previous year. However, sales of big trucks took quite a knock, dropping 30% to 35% year on year.

Goenka tells Engineering News that a decline in commodity prices, such as steel, evident since the economic crisis has set it, is also helping the industry to reduce its cost curves.

Mahindra & Mahindra is planning to invest $1-billion in manufacturing three brand-new vehicle platforms over the next two years, and in setting up a new plant, he adds.

Goenka says while other economies around the world are cooling down, China and India are still growing, even if it at a slower rate.

"Gross domestic product growth in India this year will be 6%. It is not something be sneezed at. Many countries in the world will kill for such a number.

"It means job losses are not as bad as elsewhere in the world and people still have money to spend - so cars will still sell."

In South Africa, Mahindra & Mahindra has invested a further R30-million in its local subsidiary, Mahindra South Africa (MSA).

The Indian company now owns 91% of MSA.

"South Africa is very important and strategic in our overall globalisation strategy and we are committed to this market," says Goenka.

"We have taken a number of initiatives to ensure the long-term success of our business in South Africa.

"The South African market will turn around, and we'll be there to show we are a serious player.

"Apart from the infusion of the required cash and plans for the introduction of new range of products, we aim to continuously build the Mahindra brand in South Africa."

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