NEW YORK (TheStreet) -- India's rising middle class values personal transportation for practical reasons, as well as providing symbolic proof of the Indian economy's growth. Yet the purchase of passenger vehicles in recent years remains short of expectations for international car manufacturers.
Interest rate cuts by lenders and tax cuts by government give international companies hope that sales will increase and General Motors (GM) and Ford Motor Co. (F) are two companies hoping this will change.
GM is planning a wave of new vehicle models and is aiming at capturing 5 percent of the Indian car market, according told Reuters. Stefan Jacoby, head of GM's international operations, recently told Reuters that the country is "regaining confidence" after new Indian Prime Minister Narendra Modi took office last year.
In late March, Ford sent its CEO, Mark Fields, to Gujarat for a ceremonial opening of an assembly plant and engine plant where the small Figo Aspire sedan will be built. Ford had been building the $1 billion complex since 2011; the automaker expects the ultra-competitive small-sedan segment to grow to 1.6 million a year in 2018 from 1.1 million last year. The assembly plant can produce about 240,000 vehicles a year.
According to the Society of Indian Automotive Manufacturers, passenger car sales in India rose in the latest fiscal year ended March 30 some 5% to 1.9 million, still demonstrating a rate lower than the double-digit pace of a decade earlier but perhaps a sign of improvement.