Recession and Its Effect on Automotive Industry

Topics: Suzuki, Automotive industry, Maruti Suzuki Pages: 4 (1264 words) Published: December 31, 2010
A recession is the contraction phase of business cycle. The official agency in charge of declaring that the economy is in a state of recession is the nation bureau of economic research. According to NBER the recession is defiend as “Significant decline in economic activity lasting more then a few months”, which is normally visible in GDP, real income, employment, industrial production, and wholesaler- retail sales. WHAT CAUSES RECESSION ?

An economy which grow over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expand for 6 to 10 yrs and tends to go into a recession for about 6 months to 2 years. A recession normally take place when consumer lose confidence in the growth of the economy, this leads to decreased demands for good and services, which in turn leads to decrease in production, layoff and a sharp rise in unemployment. Investors spend less as they fear stocks value will fall and thus stock market fall on negative sentiments. INDIAN SCENERIO

Indian car industry is one of the most promising car industries across the globe. It has gradually strengthened its foothold in the international arena as well. The country is dealing with many car manufacturers, dealers, and associations in various different countries including U.S. From some countries, India imports cars and car components and to some India exports. With this, the global recession is obvious to have its impact on the Indian car industry.Though India has witnessed a growing customer base, it has not inoculated them from the global crisis. The crippling liquidity and high interest rates have slowed down the vehicle demand. However, the falldown started in July with a decline of 1.9% and thereafter the industry saw a major slowdown in October 2008. Global recession has devastated the global auto industry with pinching effects on the Indian auto industry. India is a strong and growing economy but the hit of recession has put red marks...
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