1 bad news; economic slowdown is coming
Country’s two biggest automobile brands, Hero Motocorp & Maruti Suzuki are suggesting a slowdown.
Country’s two biggest automobile brands, Hero Motocorp & Maruti Suzuki are suggesting a slowdown.
Brief:
First Maruti’s sales and profits dipped. The carmaker’s net profit fell by 4.6% to ₹1,795.6 crore.
Then, Hero’s sales and profits dipped. Its net sales, or the revenue, during the period decreased by 7.9% to ₹7,885 cr from ₹8,564 cr a year ago
What does it mean?
It means that there is less demand in the market for two wheelers and four wheelers, as individuals are less confident about the future.
Lower demand for automobiles foretell economic slowdown.
Economist Vivek Kaul wrote: “Scooter and car sales are a great indicator of urban consumption power. Similarly, motorcycle sales indicate the presence or lack of urban and rural consumption power. Tractor sales tell us how the rural rich are feeling economically. Faster sales of CVs indicate robust activity in infrastructure, as well as on the industrial front. Considering that sales of all these indicators have fallen over the last two months, it tells us that consumption power is slowing down. And that’s not good news.”
How does it matter for Delhi-NCR?
The region is an automobile hub. Less demand means less production. It may lead to job losses.
Small and medium enterprises who supply to big brands such as Hero MotoCorp and Maruti Suzuki, will also suffer.
The bigger picture:
History is repeating itself. During UPA2, the economy had seen the jobless growth.
If jobless growth continues, a 10% GDP growth will be difficult.