Auto companies refrain from investing due to inflation

Auto companies refrain from investing due to inflation

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Asia Bizz: The growing inflation in India has not only held back the customers to buy a new vehicle, but has also made the companies put off their plans to expand. The Indian auto companies are now keeping themselves away from investing in new plants for the manufacture of new vehicles.

The country’s second largest motor cycle maker Bajaj Auto. Ltd has taken back its final decision on its forthcoming manufacturing facility in Mundra in the state of Gujarat. Moreover, even the number one two wheeler manufacturer, Hero MotoCorp. has right now taken back workroom its upcoming manufacturing facility in the southern states of India. In India, the state government constantly encourages the auto companies to invest in the manufacturing units, as it generates employment and gives more work to vendors.

The two wheeler companies in India source almost all the parts from within India and this results in a boost to the small businesses. Today, in a situation where the manufacturing costs have gone up and the interest rates of the loans have also increased, the customers are now delaying to buy a new vehicle. The firms too are now refraining to invest in new facilities due to the decrease in the sales. Even the car companies have held back their investments.