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Old 15th July 2013, 21:18   #16
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Default re: Slowdown in the Indian auto industry

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Originally Posted by scopriobharath View Post
Individual / City based reasons:
  • High inflation rate for vegetables and other basic necessities and increasing cost of living
  • Newer and increased taxes YoY
  • Lack of parking space for private vehicles
  • Exhorbitant parking rates at malls / movies etc
  • Traffic jams and lack of infrastructure
  • Affordable and cheaper "taxi" / "auto-rickshaw" options
  • Poor Traffic law enforcement
  • Poor Hikes and incentives
  • Vandalism & Jealousy
Add to that:

- increased costs for servicing a car (I recently discovered I was paying Rs.15 per km to drive my ex-car). Edit: And did I mention you're driving it?
- increasingly aggressive and unsafe driving behavior from other road users
- high chances of scratches, dents and heartburn (and out of pocket expenses or increased insurance)
- being treated like the golden-goose by police - tints, lights, number plates, random checks, pollution certificates.

At the same time you see autos and trucks barely able to hold their bodies together spewing an insane amount of smoke escape the 'law' everyday and you feel "why should I be the sucker?".

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Originally Posted by scopriobharath View Post
What Govt can do:
  • Reduce the interest rate on auto loans & offer 95% funding
  • Tax benefit of at least 50,000 per annum on auto emi
  • Tax exemption for fuel bills at least 10,000 per annum (similar to medical)
  • Allow one state vehicle to be driven in another state without hassles
  • Accept "Road tax only" for other state vehicles, if person is ready to pay (For people who are temporarily relocating). Do not force registration / NOC etc for temporary workers in a particular state.
I wouldn't like any tax rebates on the auto industry at all. I'd rather see these hard-working auto-sector workers being put to good use constructing a sustainable public transport infrastructure. Our rail infrastructure is bursting at all seams and it needs additional tracks to carry current+future loads. We also need faster trains between cities. Smaller, more frequent and quicker intra-city transport (light rail?) is needed to quickly transport people. Buses sharing roads with other road users is not a solution.

I agree with the out-of-state road tax issue. People hold up purchases during such uncertain times not only because they're not sure if they'll hold the job, but also because they're not sure where they will eventually find work and don't want to end up paying taxes multiple times.

Good post.

Last edited by hellmet : 15th July 2013 at 21:21.
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Old 15th July 2013, 21:25   #17
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Default re: Slowdown in the Indian auto industry

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Originally Posted by aniketi View Post
Lastly i am happy that Industry has slowed down. So less number of cars will come on road, less pollution, less traffic in the city. Already there are problems, i don't want to increase them to a level where it will break the whole system.
While I agree with you on the positive sides, let me ask: how many people in India have more than one car? Those who are capable of maintaining more than one car, will not be deterred by this slowdown. So, the one who is affected by the slowdown is the first time buyers and those who upgrade to a bigger car. So, in essence, you are happy that there are not much first time buyers (who are eagerly waiting for their first car) or upgradations!
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Old 15th July 2013, 22:14   #18
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Default re: Slowdown in the Indian auto industry

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Originally Posted by romeomidhun View Post
hose who are capable of maintaining more than one car, will not be deterred by this slowdown. So, the one who is affected by the slowdown is the first time buyers and those who upgrade to a bigger car.
Disagree - those who got rich, became that way by earning well, working hard, and not blowing up money while others were saving - most likely vice versa

mind you, even delays lead to the 20% yoy growth number falling. That number was much higher than GDP, thus it had to moderate in due course anyways.

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Originally Posted by hellmet View Post
I agree with the out-of-state road tax issue. People hold up purchases during such uncertain times not only because they're not sure if they'll hold the job, but also because they're not sure where they will eventually find work and don't want to end up paying taxes multiple times.

Good post.
That is exactly the problem in our case. We would have purchased a new car definitely if we were staying in Gurgaon. The whole vagaries of dealing with the used market twice over, and second time in a few years in chennai - we just decided to postpone our purchase (if we can!).
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Old 15th July 2013, 22:58   #19
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Default re: Slowdown in the Indian auto industry

Just saw on the news that RBI has increased the interest rates by 25 bps - attempting to slow the Rupee slide presumably. If this results in a hike in rates for consumer loans (auto, home, personal, etc), it'd be another nail in the Auto industry's short-term comatose coffin! A bit but just exasperated at how this government's ripping apart the economy and going after soft targets (my personal views - don't mean to start a politics oriented debate).
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Old 15th July 2013, 23:22   #20
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Default re: Slowdown in the Indian auto industry

I understand the fundamental reason for prefering public transport, and I also understand the feeling of "ok, if less cars sell, I'll have more space", but I fundamentally disagree with it. Most members here are presumably vehicle owners, and enjoy driving or riding. Why then this reluctance to let others experience the same joy?

I saw the puncture-walla in front of my house bought a used splendor yesterday, and felt good for him that he is able to afford it after back breaking labour for 12-15 hours a day. The more the people like him become vehicle owners, the better it is.

If you look at European countries with good public transport, vehicle ownership is 500-600 per 1000 population, against 18 for India (wikipedia). So the Bogota mayors slogan is a good left wing slogan, but like most politicians everywhere, rather economical with the truth.

So vehicles are aspirational things, and there is no direct contradiction between vehicle ownership and usage of public transport. Again see Europe as an example.
I owned a vehicle in Mumbai for 3 years, I very rarely used it, except on weekends. I used to take the train, because it was more convenient, cheaper, and faster. If you provide good public transport, people would use it. I don't do so in Delhi, because:
1. Metro does not take me close to my office
2. Last mile linkages are bad, I am at the mercy of auto drivers' union and their exorbitant rates
3. And hence, the total cost for the journey (60 auto + 22 metro + 70 auto)*2 = 304 actually is more than the price of petrol for the 60 km journey @12-12.5 kmpl.

So to encourage public transport, there needs to be more investment in public transport. Preventing (personal) investment in vehicles will not create funds for government investments in public transport. Of course, there is no need for subsidies, but there is scope for tax rationalization (without tax reduction overall).

What about road infrastructure? If the road tax was actually used on roads, India would have been a very different place by now. Besides, there is always the option of toll roads - the GQ was one of the very best projects in independent India.

Of course the 20-30% growth was unsustainable, but there is no reason Indian auto industry cannot grow @10-12% structurally for the next decade. We are going through a contraction cycle, but is also has been driven by policies to a large extent. But unfortunately, I don't see the mess ending anytime soon.

Last edited by chinkara : 15th July 2013 at 23:29.
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Old 16th July 2013, 08:13   #21
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Default re: Slowdown in the Indian auto industry

The slow down in the Auto Industry is good for the consumer as manufacturers try to remain relevant by upgrades and re-focus on service deliveries. You will see that manufacturers who have been consistent over a longer period go through the lower end of the cycle with lesser pain. Those manufactures who have not paid attention or responded to customer service issues at the Dealerships, will take the maximum hit during the slow down as people tend to get risk averse.

Very few understand the pressures a dealer faces on inventory costs. Imagine a dealer has a monthly sale of 300 vehicles. Current inventory levels are one and half month sales hence inventory levels would be 450 cars. Assuming an average price of Rs. 3.00L per car the cost of inventory is 13.50 Crs. This at 12% means an interest cost is 13.50 lakhs per month. When the customer pushes for hefty discounts the dealer has to balance between the inventory carrying cost and the cost of actual discount.


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Old 16th July 2013, 13:12   #22
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Default re: Slowdown in the Indian auto industry

I work in a software industry. My building houses 4000 software people, out of which, at a average, 800 of them come in cars every day. There may be another 200 atleast who have cars but prefer bikes for daily commute. If you see, thats a huge number (1/4th have car) and its very safe to say that software industry does have phenomenal impact on automobile industry. When s/w industry did well, automobile industry too did well.
I personally need have to switch from hatch to bigger car, kids have grown up and its very tough to accomodate them with parents. But on the other hand, in the last two years, there has hardly been any hike in the salary, so I am forced to continue using the existing car. As long as software industry continues to be in bad shape, automobile will not do well either.
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Old 16th July 2013, 20:35   #23
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Default re: Slowdown in the Indian auto industry

Quote:
Originally Posted by hellmet View Post
I wouldn't like any tax rebates on the auto industry at all. I'd rather see these hard-working auto-sector workers being put to good use constructing a sustainable public transport infrastructure. Our rail infrastructure is bursting at all seams and it needs additional tracks to carry current+future loads. We also need faster trains between cities. Smaller, more frequent and quicker intra-city transport (light rail?) is needed to quickly transport people. Buses sharing roads with other road users is not a solution.

I agree with the out-of-state road tax issue. People hold up purchases during such uncertain times not only because they're not sure if they'll hold the job, but also because they're not sure where they will eventually find work and don't want to end up paying taxes multiple times.
If out of state vehicles were NOT harassed, i would have brought my TN registered vehicle to Maharashtra and Maharashtra would have made money that way. Road tax, sales tax on petrol, service tax on vehicle service, through A.S.S as i would service my car there and so many indirect things like tolls, PUC etc.

Quote:
Originally Posted by chinkara View Post
I understand the fundamental reason for prefering public transport, and I also understand the feeling of "ok, if less cars sell, I'll have more space", but I fundamentally disagree with it. Most members here are presumably vehicle owners, and enjoy driving or riding. Why then this reluctance to let others experience the same joy?
So to encourage public transport, there needs to be more investment in public transport. Preventing (personal) investment in vehicles will not create funds for government investments in public transport. Of course, there is no need for subsidies, but there is scope for tax rationalization (without tax reduction overall).

What about road infrastructure? If the road tax was actually used on roads, India would have been a very different place by now. Besides, there is always the option of toll roads - the GQ was one of the very best projects in independent India.
My view would be to allow at least one loose end. Either make road quality & public transport quality on par with europe / USA or encourage people to buy cars(not tax them).

Quote:
Originally Posted by k149in View Post
I work in a software industry. My building houses 4000 software people, out of which, at a average, 800 of them come in cars every day. There may be another 200 atleast who have cars but prefer bikes for daily commute. If you see, thats a huge number (1/4th have car) and its very safe to say that software industry does have phenomenal impact on automobile industry. When s/w industry did well, automobile industry too did well.
I personally need have to switch from hatch to bigger car, kids have grown up and its very tough to accomodate them with parents. But on the other hand, in the last two years, there has hardly been any hike in the salary, so I am forced to continue using the existing car. As long as software industry continues to be in bad shape, automobile will not do well either.
Adding to that - I prefer to use the office transport facility, which provides "home drop". Although I do not have the luxury of an own vehicle but at least with little adjustment, i can reach home in a car.



Outside This -

The first symptoms were the A.S.S reporting losses / sustainability issues. There are some manufacturers who charge higher labor rates for expensive vehicles. example oil change for Santro is 100 whereas oil change for Santa fe is 150. Labor is the same whether Santro or SantaFe. This should be changed and also the Govt should be strict. Instead of giving giving mixies and laptops for the public, Govt should promise something like more courts / magistrates per 10,000 people. Turn-around time for Consumer cases should be faster.

Skoda made an official statement in China for DSG Failure, but india was ignored - Govt should tighten these strings. LAws should be something like if dealer cheats a customer by selling a Test-Drive vehicle or accident repaired vehicle etc
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Old 16th July 2013, 20:47   #24
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Default re: Slowdown in the Indian auto industry

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Originally Posted by chinkara View Post
I understand the fundamental reason for prefering public transport, and I also understand the feeling of "ok, if less cars sell, I'll have more space", but I fundamentally disagree with it. Most members here are presumably vehicle owners, and enjoy driving or riding. Why then this reluctance to let others experience the same joy?

If you look at European countries with good public transport, vehicle ownership is 500-600 per 1000 population, against 18 for India (wikipedia). So the Bogota mayors slogan is a good left wing slogan, but like most politicians everywhere, rather economical with the truth.

So vehicles are aspirational things, and there is no direct contradiction between vehicle ownership and usage of public transport. Again see Europe as an example.
Bravo - you just belled the cat ! I wanted to say that very thing - those who have cars will surely crib about traffic jams and parking , but denying others the right/means by legal or financial barriers, is hypocritical. Spot on about the politician's feel-good speeches, but they all travel in huge convoys of luxury cars. How many government bigshots use public transport ?

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Originally Posted by k149in View Post
I When s/w industry did well, automobile industry too did well. As long as software industry continues to be in bad shape, automobile will not do well either.
I haven't checked the size of the IT industry, and while it is sizable, I doubt it is the sole or main driver of automobile sales, except perhaps the IT cities like Bengaluru, Pune, Hyderabad. Also, some industries have caught up and exceeded the pay scales of the IT industry. I reckon most car sales are to businessmen. Add to it, it's the high end/luxury car market that is growing at 60% as reported in newspaper, while mainstream car market is shrinking YoY. I don't think it's those IT guys ( employees) buying Beemers and Audis which I see lot of lately , rather business owners (could be IT business though ).

To steer out of this mess, will take proper economic cleanup. Tax structure is skewed, petrol vs diesel pricing awry. India isn't yet prosperous overall, real estate prices are too high , people saving for a home will likely skip buying cars. I don't think this current govt is capable of handling this situation, they seem to have worsened the economy. I hope the 2014 election sees this government leave with its tail between its legs.
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Old 17th July 2013, 10:04   #25
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Default re: Slowdown in the Indian auto industry

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Originally Posted by EagleEye View Post
Having said all this, I would like to quote the famous words of the Mayor of Bagota:
Attachment 1110895
Thanks for the informative post EagleEye, Well said by the mayor of Bogota. But his own city seems to be working on exactly the reverse principle. Everybody owns a car and whatever public transport is available, is crammed up to the brink too. The scene there on these aspects is not unlike India. Traffic snarls, overused public transport with age old vehicals etc. But still Bogota is way ahead of us in terms of managing it's traffic and the veriety and kind of models that are available for the people. There is no match there . Partly to do with some efforts towards town planning I think but must be mainly attriibutable to the policies too.
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Old 17th July 2013, 11:01   #26
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Default re: Slowdown in the Indian auto industry

Another reason i missed in my earlier post is the resale market. Due to increased automobile market in last 10 years, resale market has also grown like anything. There are lacs of cars available in the resale market. Also recently, in last 2-3 years; one can get very good cars at very reasonable rate. With high petrol costs, high interest rates; many people are considering this as a very good option. Consider my brothers example, he was in the market for car last year. Any good small car was costing around 5 lacs. That means he has to make a down payment of 2 Lacs & pay installment of around 7k per month for next 5 years. Instead what he did? He just bought a very well maintained top end petrol Indigo for just 1.5 Lacs. So now he don't have any EMI, so no tension. He is happily using his car. Also he is not worried about small scratches he can get on his car while driving in city. For new car he must have worried for that. Also he got big car in small amount. This trend i have seen with some of my friends as well. People are very happy to buy a car in less than half a price which it could cost for a new car in the market. One of my friend bought second generation Honda City for just 3 lacs, he is very happy too. He saved 7 lacs which he has to put to buy a new city.

I know that new car is new car after all, its benefits, its driving pleasure etc. But good resale car is always a very good option who don't wanna spend their hard earned money or for those who are tight on their budget.
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Old 17th July 2013, 11:20   #27
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Default re: Slowdown in the Indian auto industry

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Originally Posted by chinkara View Post
If you look at European countries with good public transport, vehicle ownership is 500-600 per 1000 population, against 18 for India (wikipedia). So the Bogota mayors slogan is a good left wing slogan, but like most politicians everywhere, rather economical with the truth.
I think the Mayor's comment is not about social equality rather having a public transport system which is efficient, cheap and fast so that even the riches, which otherwise would use their own cars, are compelled to use it. It is about making a case.
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Old 17th July 2013, 12:06   #28
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Default re: Slowdown in the Indian auto industry

Viewing a car sale slowdown is a relative term.

See what is happening if the sale of each manufacturer is analyzed in depth.

Quality and technically superior cars are still growing in sale. There is a customer rejection of overpriced or old tech products and unreliable products.

Alto still sells in great numbers.
Eon and Verna sales grow
Bolero still serves rural India with 10,000 units a month sale
Scorpio continues to sell in good numbers
Wagon R sales are steady.
More i10 sell than Santro now which is an upgraded replacement.
Nissan is not marketing itself right to realize the full potential.
The initial launch europhea of XUV 500 is over.
Toyota is making a steady growth
VW Polo is gaining acceptance sales drops are minor
Skoda has little else but Rapid left as a popular choice
Tata Motors is in serious trouble
Hyundai Verna is the peoples choice with its looks and taken over a lot of Honda City Sales
THe Hottesest thing from Honda is Amaze. Sales figures in rest of 2013 will be as many as they can produce.

Last edited by desertfox : 17th July 2013 at 12:08.
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Old 17th July 2013, 12:29   #29
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Default re: Slowdown in the Indian auto industry

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Originally Posted by aniketi View Post
Another reason i missed in my earlier post is the resale market. Due to increased automobile market in last 10 years, resale market has also grown like anything. There are lacs of cars available in the resale market. Also recently, in last 2-3 years; one can get very good cars at very reasonable rate. With high petrol costs, high interest rates; many people are considering this as a very good option.

...

People are very happy to buy a car in less than half a price which it could cost for a new car in the market.

...

I know that new car is new car after all, its benefits, its driving pleasure etc. But good resale car is always a very good option who don't wanna spend their hard earned money or for those who are tight on their budget.

True. Second hand markets thrive especially when the economy in general is weak and when people have less disposable income for 'luxuries'.

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According to the latest study on the sector, the Indian used car industry possesses a significant potential, with overall market expected to grow at a CAGR of around 22% during 2011-2014 to reach 3.9 Million Units by 2014-end.
Source: http://www.researchandmarkets.com/reports

Quote:
The Indian used car market is visibly unaffected by the economic downturns and slow industry growth, with sales actually surging ahead by 22 per cent, as compared to the new car sector. As per reports, the sales of second hand cars has been growing steadily in numbers throughout the economic slowdown, whereas the brand new car market suffered from dwindling sales figures in the same period. At present, the Indian used passenger car market is projected with sales of 2.5 million units per year and is worth an astonishing Rs. 52,000 crore. Industry sources believe that the second hand car market could hit the 8 million units mark by the end of 2017.

As per the data generated by Crisil, the Indian used passenger car market has climbed up at a Compound Annual Growth Rate (CAGR) of 22 per cent, from 1 million units recorded during Financial Year (FY) 2007 to 2.6 million units in FY 2012. Further, the second hand car sector is estimated to grow at a CAGR between 22 and 24 per cent, over the next five years from 2012 fiscal till 2017 fiscal.
Source: http://www.cartrade.com/car-bike-new...17-119932.html


This 22% estimated growth rate of second hand markets will obviously eat away from the growth of sales of new cars.
Another point is that these days the cars available in the Indian market are sturdier and longer lasting that what we used to have earlier. These cars could change hands 2-3 times over several years, and still retain their functional value.
So as you mentioned, this is one important contributor to the slowdown of the auto industry.

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Originally Posted by extreme_torque View Post
I think the Mayor's comment is not about social equality rather having a public transport system which is efficient, cheap and fast so that even the riches, which otherwise would use their own cars, are compelled to use it. It is about making a case.
Exactly.
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Old 17th July 2013, 13:52   #30
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Default re: Slowdown in the Indian auto industry

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Disagree - those who got rich, became that way by earning well, working hard, and not blowing up money while others were saving - most likely vice versa
But do you think that a person earning Rs 50K pm can maintain more than one car in his family just by 'savings'?
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