In spite of slow economic growth and skidding demands witnessed in the last year, automobile sector pumped a whopping investment of Rs.22,000 crore for making new factories, rolling out new products and adding facelifts. The amount of 22,000 crore excludes an additional investment of 5,000 crore ($1 billion) which is made by components and ancillary firms to provide backing to this huge figure. It is also said that industry pumped more than 70,000 crores in the last four years bearing uncertainties from all sides and especially from the Government i.e. change in fuel policies with major reference to their prices.
Though the investment made by component and ancillary firms is not negligible. They invested around $6-7 billion in the last four years at a pace of less than $1billion in 2012-13, $1.6-1 .9 billion in 2011-12, $2-2 .5 billion in 2010-11 and $1.7 billion in 2009-2010.
These numbers would have been higher if slowdown hasn’t affected the industry. Car sales were at peak in 2010, at the time when investment began to flow in but in later years it started dwindling. It went so viral that in 2012 an unexpected figure surfaced the balance sheet. Because of eroding sales, some of the investors called off their investments while many of them postponed it.
It can be said that complete utilization of the investments is not yet seen. Industry has to prove itself to get more investments and also to utilize the initial one.
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