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Old 28th May 2014, 08:31   #1
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Default Auto Sector wants NaMo Govt to boost market conditions

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India's passenger-car manufactures are hoping for the new government to cheer up the auto market and help them crank up idled capacities in an industry that is among the worst hit by the country's economic slowdown.

Analysts and industry executives expect a change in market sentiment as a new government with a stronger political mandate takes charge. Many expect the Narendra Modi government to take bold steps aimed at boosting consumer sentiment and engineering an economic turnaround.
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What are your opinions guys on this topic?

SOURCE: http://economictimes.indiatimes.com/...w/35624995.cms

Anurag.
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Old 28th May 2014, 10:10   #2
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Default re: Auto Sector wants NaMo Govt to boost market conditions

I do NOT think they should give any boost! The car makers have been riding on a profit wave increasing the prices at every possible opportunity! All of them have consistently hiked the rates on account of inflation, raw material price rises, rupee depreciation etc etc! I agree, at one time, the rupee was 62/- which has now come down to 58/- ! Where is the price reduction? Just because they want to keep inflating their prices & profit margins, do they expect the government to give them subsidies? First of all, they should provide good discounts and get into a level playing field. If sales still do NOT pick up, expect the government to help!

Edit:: At least do NOT provide any subsidies to those manufacturers who gave lower priority to Indian consumers than export countries (read as Ford).

Last edited by swiftnfurious : 28th May 2014 at 10:14.
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Old 28th May 2014, 10:30   #3
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Default re: Auto Sector wants NaMo Govt to boost market conditions

That was more frustration than anything else! Why are you so much against Ford? Business seeks profits and is not bothered by who the buyers are. Had our Tax system been more lean and simplified, they would have sold more Ecosports in our country than anywhere else! On an average, an Indian car buyer pays 26-30% of the car's value as compared to 10-12% in Germany or Korea or 8% plus annual tax in Japan which is way lesser than what we pay. I suggest you look at the balance sheets of car makers over the last 3 years and decide for yourself whether it is a profit wave or drain. If you want more clarity, you should have seen the inventory pile up of Indian Automakers few months back which was also shared on TeamBHP. Check http://www.team-bhp.com/forum/indian...li-2013-a.html (Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013)

Lastly it is only exports that has kept our Auto Industry ticking. Reduction in taxes will lead to a spurt in demand which will have allied benefits and help in creating an economic turnaround.

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Originally Posted by swiftnfurious View Post
I do NOT think they should give any boost! The car makers have been riding on a profit wave increasing the prices at every possible opportunity! All of them have consistently hiked the rates on account of inflation, raw material price rises, rupee depreciation etc etc! I agree, at one time, the rupee was 62/- which has now come down to 58/- ! Where is the price reduction? Just because they want to keep inflating their prices & profit margins, do they expect the government to give them subsidies? First of all, they should provide good discounts and get into a level playing field. If sales still do NOT pick up, expect the government to help!

Edit:: At least do NOT provide any subsidies to those manufacturers who gave lower priority to Indian consumers than export countries (read as Ford).

Last edited by rahulsharma2008 : 28th May 2014 at 10:33.
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Old 28th May 2014, 10:52   #4
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Default re: Auto Sector wants NaMo Govt to boost market conditions

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Originally Posted by rahulsharma2008 View Post
That was more frustration than anything else! Why are you so much against Ford?
Absolutely! They use the Indian sops & facilities and downgrade the Indian customers by prioritizing their exports and making Indian customers wait endlessly. I can't accept that! Look at what Honda is doing with City or Mahindra had done with XUV. As far as I could remember, Mahindra even deferred their international launch due to the demand in India and wanted to focus more on Indian customers.

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Originally Posted by rahulsharma2008 View Post
...Had our Tax system been more lean and simplified, they would have sold more Ecosports in our country than anywhere else! ..
Are the tax rules completely different for Ford alone? That's the same rules which apply for other manufacturers as well! So let's NOT defend Ford for their ridiculous attitude.

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....I suggest you look at the balance sheets of car makers over the last 3 years and decide for yourself whether it is a profit wave or drain. If you want more clarity, you should have seen the inventory pile up of Indian Automakers few months back which was also shared on TeamBHP...
That's bound to happen in a slow economy when there are "n" number of hikes for a product thereby pricing itself out of the segment or making it "pricey" than it actually is! Otherwise, I still hear of huge demand for City / Celerio / Xcent etc which still carry very good price or is even slight premium. Anybody & everybody who are constantly re-inventing are definitely having good sales. Who lose are the ones who do NOT put the effort.

Last edited by swiftnfurious : 28th May 2014 at 10:58.
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Old 28th May 2014, 11:01   #5
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Default re: Auto Sector wants NaMo Govt to boost market conditions

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Originally Posted by swiftnfurious View Post
Edit:: At least do NOT provide any subsidies to those manufacturers who gave lower priority to Indian consumers than export countries (read as Ford).
I think I am going off-topic, but let me add something about Ford anyway.

From the first post, Ford still has 33% unused capacity. That means, they can still meet Indian demand (say, by hiring additional workers, creating additional shift etc). Why they aren't doing is, in my guess, because of uncertain future. For most cars below 10L in India, the demand settles down to 2k-3k per month as long as it doesn't have Suzuki badge on it. At the same time, if Ford subsidiaries from other countries stop buying from Ford India, Ford India's MD will have tough time convincing his bosses about the investments he made in India!
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Old 28th May 2014, 11:04   #6
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Default re: Auto Sector wants NaMo Govt to boost market conditions

I for one would not like the govt to hand down any additional SOPS.
The auto sector of India has been totally irresponsible, and has also done extensive lobbying which means airbags are still not compulsory.

With an eye on short term profits, every manufacturer makes clones today, and no matter what car you buy, it does not really matter.
The R&D budgets are being spent in marketing, and innovation is mostly imported.

The govt should quickly do the following
1. Make airbags and ABS compulsary - The world is moving to side airbags and we do not even have front airbags mandatory
2. Start upgrading the refineries to supply low sulfur diesel all over India so that we can do a one time move to E-V
3. Simplify taxation
4. Cut import duties, not drastically, but by a fair margin, so that there is more competition pressure. At the same time offer sops for manufacturing in India. If Hyundai and Nissan can use India as export hub, why not others. Chennai is already the detroit of India, and with proper policy even others can come here. Even Force like relatively unknown players have tech knowhow to assemble mercedes engines!
5. Bring in Fuel efficiency norms
Stuff like tweaking excise here and there and other silly stuff is nonsense.Keep things Simple..
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Old 28th May 2014, 11:04   #7
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Having said that I can say that except Ford no one else has done such thing in the recent past. Why make others suffer for one bad manufacturer? Speaking of Business ethics, yes Ford and Skoda do come at the bottom of the table but that doesnot mean you let the whole industry suffer. Business decisions are not made by being emotional and patriotic, there is a certain logic behind the same. Honda & Mahindra focusing more on India than abroad is because India has been biggest market for their products aka City and Scorpio (before XUV came) Hence the decision to prioritize India than others.

Lets not argue endlessly. Bottomline is if Cars become cheap, I am sure our community will love it. Its a win win situation for all !

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Originally Posted by swiftnfurious View Post
Absolutely! They use the Indian sops & facilities and downgrade the Indian customers by prioritizing their exports and making Indian customers wait endlessly. I can't accept that! Look at what Honda is doing with City or Mahindra had done with XUV. As far as I could remember, Mahindra even deferred their international launch due to the demand in India and wanted to focus more on Indian customers.



Are the tax rules completely different for Ford alone? That's the same rules which apply for other manufacturers as well! So let's NOT defend Ford for their ridiculous attitude.



That's bound to happen in a slow economy when there are "n" number of hikes for a product thereby pricing itself out of the segment or making it "pricey" than it actually is! Otherwise, I still hear of huge demand for City / Celerio / Xcent etc which still carry very good price or is even slight premium. Anybody & everybody who are constantly re-inventing are definitely having good sales. Who lose are the ones who do NOT put the effort.
Exactly what I meant!

Simplify Taxes ! They are too complicated at current

Excise Duty
Import Duty
Sales Tax
Registration tax
Road Tax
Octroi
etc.


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Originally Posted by tsk1979 View Post

3. Simplify taxation

Stuff like tweaking excise here and there and other silly stuff is nonsense.Keep things Simple..

Last edited by Vid6639 : 28th May 2014 at 13:49. Reason: merging posts. Please use the edit option if replying in the same thread within 30mins. Thanks
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Old 28th May 2014, 11:17   #8
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Default re: Auto Sector wants NaMo Govt to boost market conditions

They should (Govt) prioritize the infrastructure and public transportation over the additional SOPS to the Auto industry being discussed here.
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Old 28th May 2014, 11:40   #9
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Default re: Auto Sector wants NaMo Govt to boost market conditions

With inflation and high interest rates, not many are interested in buying cars. You cant just support the car manufacturers without improving the overall economic situation. We spend more on daily necessities which should be the first priority.
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Old 28th May 2014, 11:49   #10
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Default re: Auto Sector wants NaMo Govt to boost market conditions

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Originally Posted by rahulsharma2008 View Post
Having said that I can say that except Ford no one else has done such thing in the recent past.
Not that the others are saints. It is pure economics. They make more money selling the Ecosport overseas than here. That is the price you pay for wanting to have everything at Maruti prices. Whatever happened to liberty? Just like we have the liberty to buy whatever car we want, they have the liberty to sell to whomever they want.

BTW, car manufacturers do not require any sops. The car manufacturing companies should possess the ability to co-exist with market forces. Those who can't should perish. Govt should rather develop the roads.

Last edited by blacksport : 28th May 2014 at 11:52.
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Old 28th May 2014, 12:07   #11
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Default re: Auto Sector wants NaMo Govt to boost market conditions

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Originally Posted by rahulsharma2008 View Post
That was more frustration than anything else! Why are you so much against Ford? Business seeks profits and is not bothered by who the buyers are.

Lastly it is only exports that has kept our Auto Industry ticking. Reduction in taxes will lead to a spurt in demand which will have allied benefits and help in creating an economic turnaround.
No hard feelings or issue against Ford but it is the way they are treating the Indian customers. I know they are gaining more money by exporting the car and it the same money that the world is living for. What I want to say is, if Ford loves exporting cars more then why accept booking with advances and give silly promises of delivery and at last moment shy away saying allotment is not yet given by the plant.

Is there any harm if things are clear and frank? I can see Ford loosing customers than gain.

Anurag.
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Old 28th May 2014, 12:21   #12
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Default re: Auto Sector wants NaMo Govt to boost market conditions

Quote:
Originally Posted by rahulsharma2008 View Post
I suggest you look at the balance sheets of car makers over the last 3 years and decide for yourself whether it is a profit wave or drain.

Lastly it is only exports that has kept our Auto Industry ticking. Reduction in taxes will lead to a spurt in demand which will have allied benefits and help in creating an economic turnaround.
Do you mean to say that all auto companies are doing the Indian customer a big favour by doing business in this country at a loss. What about the huge royalty amount transferred by the Indian subsidiaries to their foreign holding companies; have you taken that into account.


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Originally Posted by a4anurag View Post
What I want to say is, if Ford loves exporting cars more then why accept booking with advances and give silly promises of delivery and at last moment shy away saying allotment is not yet given by the plant.

Is there any harm if things are clear and frank? I can see Ford loosing customers than gain.
Why don't we blame ourselves for that. Any business would welcome inflow of funds if it is available at lower than the market rate, it is a working capital for the business.

Last edited by Sommos : 28th May 2014 at 12:40.
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Old 28th May 2014, 12:26   #13
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Default re: Auto Sector wants NaMo Govt to boost market conditions

Govt can not directly boost Auto sector by providing SOPs. Rather what is expected is that the overall economy would improve, improved GDP, inflation under control, dont think they can do much about fuel prices in the near future, plus they have to restart / start all the infra projects which had taken back-seat in last few years. If all of this happens then it will have positive effect on auto industry with better purchasing power of customers. It will atleast take 4- 6 months for improvements to start coming.
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Old 28th May 2014, 12:28   #14
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Cannot agree with you more ! The nuisance is more from the Dealers since they want to make a quick buck by selling these cars with an under the table premium. Personally I know a dealership who offered me same day delivery by paying Rs. 50k as "On" amount! Ford has lost many customers due to lack of transparency and greedy dealers.



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Originally Posted by a4anurag View Post
No hard feelings or issue against Ford but it is the way they are treating the Indian customers. I know they are gaining more money by exporting the car and it the same money that the world is living for. What I want to say is, if Ford loves exporting cars more then why accept booking with advances and give silly promises of delivery and at last moment shy away saying allotment is not yet given by the plant.

Is there any harm if things are clear and frank? I can see Ford loosing customers than gain.

Anurag.

Exactly what i meant when I was talking of Ford. Car Industry cannot co-exist with market forces in a country like India where everything from fuel prices to multitude of taxes are controlled by the government.

If they can tax something exorbitantly in good times (remember government increased excise duties 2 years back when auto sales were soaring), they should reduce the tax as well in tough times. Its not about Sops its about elasticity of demand. What will roads be worth if we wont have the cars to run on them! Its a hand in glove sort of a relation which you cant address in isolation.

Best solution is to bring in GST and abolish all other taxes

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Originally Posted by blacksport View Post
Whatever happened to liberty? Just like we have the liberty to buy whatever car we want, they have the liberty to sell to whomever they want.

BTW, car manufacturers do not require any sops. The car manufacturing companies should possess the ability to co-exist with market forces. Those who can't should perish. Govt should rather develop the roads.
No I was correcting what swiftnfurious said. He said that Auto companies are on a profit wave by hiking prices at the slightest opportunity which is wrong because numbers suggest otherwise.

Indian auto companies have surely transferred huge royalty amounts to foreign holding companies but at the same time made sure that India becomes a small car export hub of Asia. That has brought in a lot of foreign currency back into India and also generated employment in tough times. Obviously it has made a positive impact on our CAD.

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Originally Posted by Sommos View Post
Do you mean to say that all auto companies are doing the Indian customer a big favour by doing business in this country at a loss. What about the huge royalty amount transferred by the Indian subsidiaries to their foreign holding companies; have you taken that into account.

Last edited by Vid6639 : 28th May 2014 at 13:49. Reason: merging posts. Please use the edit option if replying in the same thread within 30mins. Thanks
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Old 28th May 2014, 13:43   #15
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Default re: Auto Sector wants NaMo Govt to boost market conditions

Despite giving land very cheap to Tata & giving huge subsidies on taxes, Nano from Gujarat flopped - as per Gujarat CAG subsidy to Tatas for Nano project totalled Rs 33000 cr. So how much more does Modi need to do give away as PM?

Ultimately if we are get back to growing at 7.6% average as we were during the UPA decade, then cars will sell as fast as they were in 2009 when we surpassed 9% growth. Thats the main factor.

Last edited by gsurya : 28th May 2014 at 13:47.
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