India Motors Along (Literally)

When I was growing up in India, the common traffic joke was:

How does an Indian cross the street?

Answer: He waits till he is born in his next birth across the street.

The sad part is they were only partially kidding. I can still remember how hard it was to cross Bombay’s streets when I lived there as a student.

Rush hour traffic in Bombay would put New York City to shame. There was utter confusion on the streets. The lane markings were more suggestions than guidelines. Traffic lights were built to be ignored.

And yet, the numbers of traffic accidents are still quite low, especially compared to the United States. The primary reason for this is cars travel at a speed of less than 35 miles per hour. Bombay’s roads were never designed for the volumes of traffic that run its course daily, so drivers have to take it slow.

Also, the chaos is very organized. Each driver knows his space and the un-written rules of traffic. Native drivers drive in the heavy traffic without too much stress. Also, the rich natives have drivers and the poor cannot afford cars.

The middle class gets crushed in-between (if you’ll pardon the pun). But they take it in stride, as a minor consequence of living in India’s largest city. Such is the way of life in the busy metropolis of Bombay.

That’s the reality of living in India. But strangely, all over the world India has a different reputation. India is underdeveloped, ridiculously poor, or even the third world. While that may be true of a few regions, overall nothing could be further from the truth…

India’s Car Industry: Small Taste of India’s Growth Story

It’s not just about busy streets. You can see a microcosm of the Indian economy in its auto industry.

India is soon to become the 5th largest manufacturer of cars in the world.

This is a lesser-known fact of India. It goes against the image of India being a poor and underdeveloped 3rd world country. But this is a fact.

Let’s take a closer look. Below, you’ll see domestic sales of passenger cars rose over 20% in September from just one year ago…

The $2,000 Car and Indians to Buy It

As you can see, India’s automobile sales are soaring. This tells me two things…

First, the level of consumerism is growing in India along with disposable wealth in the hands of the middle class. In other words, middle class buyers have money to spend and they’re buying up cars.

Second, the level of business growth is increasing in India. That’s driving such statistics.

Both indicators tell me that India is buzzing with activity. Indeed, India’s future is looking brighter each passing month (except for the hapless Indian who is still waiting to cross the street).

The Nano, or the $2,000 Car

Recently, the Indian car industry caught the world’s attention when they introduced the NANO Car in India. This is the first automobile manufactured (in recent times) that’s selling under $2,000 each for its base model.

Many Indians are buying this car. But what’s amazing is most are not selecting the base model. Instead, they are buying significant upgrades. And this once again reflects of the disposable wealth in the hands of the middle class.

I would be looking for a good Indian automotive company such as Maruti Suzuki or Premier Automobiles Limited to add to my portfolio in near term.

And I’m definitely buying up the Indian rupee right now in preparation for the next wave of good economic news in India.

Stay Long India (And avoid crossing the street when in India).

Yours in FX Profits,
Ashish Advani

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