Picture this: Retail auto sales are growing steadily, climbing more than 20% in three of the past five years. In fact, sales last year grew almost 30%, to 2.5 million units (see the chart below, courtesy of the Society of Indian Automobile Manufacturers).
But June figures ― a mere 1.6% increase ― have automakers on edge. In the past few months, demand has slowed and inventories have started to pile up. Carmakers are answering by offering the best discounts and freebies in two years, from massive rebates to 0% interest.
Though it sounds familiar, the scenario is taking place in India, not in the U.S. With sales on the skids, OEMs are putting plans in place to spur volume. But is the country getting itself into a bind, artificially propping up sales? Might automakers suffer significant losses if this trend continues?
