Despite all the unfavourable market conditions of dropping out sales, declining profit margins and diminishing capacity utilisation, some of the carmakers are eyeing at long term potentials in India. And for the same, 5 autogiants including Maruti Suzuki, Ford, Honda, Toyota and Renault-Nissan are planning to spend Rs. 11,000 crore on additional capacity building for 1 million cars. Though the carmakers have lined up big investments keeping in mind the competitive nature of the market, a fear of surplus production is bothering them.
Currently the Indian passenger vehicle market is operating at 60-65% of capacity, which is one of the lowest levels in the last 5 years. So, Industry experts believe that with inadequate 2% growth in FY12 and a drop last year, it is suspicious if market comes out of gloomy phase. And if this does not happen, huge idle capacity will force auto industry fall in more losses. Moreover, even the launch of 10-15 new cars from Ford, Honda and Renault-Nissan may not actually inflate the market