Hans Greimel
Hans Greimel
Asia Editor, Tokyo

In India, torrential rains mean good business

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TOKYO -- We’ve all seen the stereotypical pictures of peak monsoon season in India: Throngs of people wading waist-deep through cities swamped with muddy water.

But this year’s monsoon season, which started this month, the Indian auto industry is worried about slumping sales because there is not enough water.

“A bad monsoon would certainly mean some negative impact,” Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers warned reporters.

The problem: Monsoon rains are forecast to come in below average this year.

It may seem counterintuitive that torrential rains -- and their associated flooding -- might bolster auto sales. Especially considering the impact of extreme weather in the United States, such as last winter’s polar vortex and the chill it cast on business.

But in India, the annual rainy season delivers four-fifths of the country’s precipitation.

And just as farmers depend on the life-giving rain to grow their crops, the nation’s auto dealers depend on a successful harvest to put money in customers’ pockets.

No rain, no car sales. Especially in India’s rural areas, where two-thirds of the people live.

Passable roads this monsoon season would come a critical time for the world’s No. 6 auto market. Sales have slid for two years, and carmakers were hoping for a rebound this year on expectations that new Prime Minister Narendra Modi might jumpstart the economy.

The slump has left manufacturers struggling to soak up unused capacity there.

Last month, General Motors said it would start exporting vehicles from India in the second half of the year to ramp up local factory utilization rates amid the slowdown.

A dry monsoon could leave India’s carmakers even thirstier.

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter

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