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Old 17th November 2016, 15:19   #91
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

I am expecting some concessions in upcoming budget which will be advanced to 1 February 2017. How much will largely depend on the success of demonetisation but Government will definitely do some populistic announcements to justify this drive. But I will be equally worried for the depreciating Rupee.

I think it will be best to postpone purchases for a while and hunt for bargains in December or Early January for the 2016 models. This, of course, will be more rewarding on high segment cars.
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Old 18th November 2016, 10:08   #92
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by Turbanator View Post
. But I will be equally worried for the depreciating Rupee.
I am of the view that the Rupee would appreciate due to demonetisation.

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I think it will be best to postpone purchases for a while and hunt for bargains in December or Early January for the 2016 models. This, of course, will be more rewarding on high segment cars.
Could you elaborate your thoughts on this? I see this as an opportunity to get a good deal on a premium segment car and have been talking with some dealers.
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Old 18th November 2016, 14:42   #93
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by earthian View Post
I see this as an opportunity to get a good deal on a premium segment car and have been talking with some dealers.
I am not too sure about getting a 'good deal' in premium segment right away.

This is an article about the probable effects of demonetisation - http://www.team-bhp.com/forum/indian...ml#post4090024 (Effect of Rs. 500 / 1000 note ban on the Indian car industry)

There will be an overall impact on the automobile industry. The used car market is likely to feel a larger pinch in the short term.

Premium segment? A person looking to buy a Jag or a Merc or a BMW is not going to walk in with a bagful of cash. Plus, more likely than not, it will be a 'business' purchase rather than a 'personal' one (so as to get depreciation benefits).

Of course, given the way things are moving and whole lot of negative news floating around may create a ripple effect on this segment.

If the overall market slumps, and demand takes a beating, then dealers may be ready to cut their margins to push sales. Of course, they will be looking for other ways to compensate the loss in earnings - either through reduced finance costs and / or incentives from the manufacturers.

So given the approaching year end and the urge to clear stocks by dealers, you can try to haggle a deal. (BTW, I read somewhere that when GST is introduced, prices of premium segment will come down as the tax rate slab for this product are likely to be lower)
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Old 18th November 2016, 15:19   #94
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by vrprabhu View Post
Premium segment? A person looking to buy a Jag or a Merc or a BMW is not going to walk in with a bagful of cash. Plus, more likely than not, it will be a 'business' purchase rather than a 'personal' one (so as to get depreciation benefits)
You would be surprised! During the time when suburban farmers sold their land at exhorbitant prices, it was not uncommon for a customer to walk in with a bag to buy a 4 bangles car in ahmedabad. When i was talking to the Merc dealer, he did tell me that sales were affected. The quantum of "adjustment" would probably be not more than 10%, but most of these customers bought on lease, where the lease amount, even if paid in white, could get backed up by other essential spending in black. This segment has been affected.
For the record, i am not looking for a 'business' purchase, for the excellent reason that i don't have a business!
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Old 18th November 2016, 19:08   #95
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

No impact yet of demonetization on sales - Maruti Suzuki

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http://www.moneycontrol.com/news/bus...f_7983961.html
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Old 18th November 2016, 19:13   #96
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Talking Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by vrprabhu View Post
There will be an overall impact on the automobile industry. The used car market is likely to feel a larger pinch in the short term.
Well, my thoughts are a bit different. Being a bit close to the used car market, I have noticed that the dealers and sellers who are willing to accept the currency in the denominations of 500 and 1000 are not just selling the cars, they are instead selling them at higher than market prices. Believe me, put a big board outside the place of any dealer saying "500 and 1000 rupee notes are accepted here" and see the result.

Quote:
Premium segment? A person looking to buy a Jag or a Merc or a BMW is not going to walk in with a bagful of cash. Plus, more likely than not, it will be a 'business' purchase rather than a 'personal' one (so as to get depreciation benefits).
A guy known to me is roaming around with cash in the boot of his car simply searching for anyone who is willing to sell his/her premium car for 30-40 lac in the denominations of 1000 and then transfer the ownership after a gap of 5-6 months. Mark my word, a number of seasoned, white collar, small to medium enterprises owners are happily accepting this money giving out their cars which are either lying unused or getting more than market value.

Quote:
If the overall market slumps, and demand takes a beating, then dealers may be ready to cut their margins to push sales. Of course, they will be looking for other ways to compensate the loss in earnings - either through reduced finance costs and / or incentives from the manufacturers.
The demand IMO will take a beating only in case of the cars priced between 10 lac to 30 lac. This exactly is the price point where most of the purchases are done which involve a fraction of the car price in black. Under 10 lac is mostly our hard working crowd who somehow take loans and manage the finances to get their set of wheels home. Over 30 lac are elite politicians, contractors, businessmen etc who don't have any issue in getting loans (They can be done on phone and signature formalities later).

Coming to auto dealers; a friend took his Innova 2.8Z today. He inquired about the car last evening and discovered that the dealers have some stock with them. Toyota dealer didn't gave the discount of a rupee, VW dealer is super cool with the attitude "We don't sell many cars any ways, when you have money then come back after the situation is normalized". Maruti and Hyundai dealers have few issues in selling their smaller cars but their premium offerings (It's not a joke, they also have premium cars) are taking a royal beating. Tata any ways should be happy today because their Safari any ways doesn't sell


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So given the approaching year end and the urge to clear stocks by dealers, you can try to haggle a deal. (BTW, I read somewhere that when GST is introduced, prices of premium segment will come down as the tax rate slab for this product are likely to be lower)
I have the official copy (Very rare one) of the proposed GST structure in my phone. I doubt if there will be any significant difference in the prices of premium cars. Any ways, GST is a bit far as of now and expected it to get implemented 'effectively' quite soon is not taking anyone anywhere.

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Originally Posted by volkman10 View Post
No impact yet of demonetization on sales - Maruti Suzuki
Indeed, they have enough of the customers to fill the void created after the ones with cash payments have subsided. Additionally the wedding season is on and this year; like always, DZire is a rage among with Vitara Brezza (New wedding king in NCR) and Creta. Small car buyers any ways don't have issues as one can more than easily adjust 5-6 lac even if the purchase is in full cash

Last edited by VKumar : 18th November 2016 at 19:24.
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Old 18th November 2016, 19:56   #97
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by earthian View Post
You would be surprised! During the time when suburban farmers sold their land at exhorbitant prices, it was not uncommon for a customer to walk in with a bag to buy a 4 bangles car in ahmedabad.
WOW! This makes me recollect a news item some time back about Mercedes selling a good number of cars in Aurangabad (Maharashtra) because a group of businessmen (25+ members ?) decided to buy the same car at the same time.

And, of course, I have also heard stories about farmers, after harvesting bumper crop, dumping cash to buy a car off the shelf.

These are likely to be exceptions rather than the norm.

For example, Kerala is supposed to have highest sale of premium cars (because of Gulf money?). Will demonetisation affect them??

Anyway, I wish you the very best in your quest and do hope that you get a a very good deal

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Originally Posted by VKumar View Post
A guy known to me is roaming around with cash in the boot of his car simply searching for anyone who is willing to sell his/her premium car for 30-40 lac in the denominations of 1000 and then transfer the ownership after a gap of 5-6 months. Mark my word, a number of seasoned, white collar, small to medium enterprises owners are happily accepting this money giving out their cars which are either lying unused or getting more than market value.
Suppose I was the seller.

I get a good deal and sell my car at an astronomical price. (The deal has to be dated prior to 8th November).

I put in the money in my bank account.

What about taxes? I have to pay taxes on the gain and income.

After six months, I buy back the car. And pay only the balance left (i.e. sale price received minus taxes paid).

This transaction will get reflected in my bank account, as I will be paying through my account (white).

How do I explain the transaction to Income Tax Authorities??

All transactions above Rs. 50,000/- are going to be reported to them. They may not take action immediately on those up to Rs. 2,50,000/-, but those beyond that will get scrutinised. And, I will be harassed by them. Is it worth the trouble?


BTW, your response seem to be inclined towards that there could be a rise in used car prices (at least in the premium segment)
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Old 18th November 2016, 20:26   #98
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Talking Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by vrprabhu View Post
And, of course, I have also heard stories about farmers, after harvesting bumper crop, dumping cash to buy a car off the shelf.
The farmers who are buying new cars every February or March against full cash payments are not the small farmers, these are the landlords who have land in areas more than say 10 acres. Let me give you a rough calculation (I am a villager after all) of how much income you expect from a big farmer.

1 bigha = 1000 square yards
1 hectare = 11,111.11 square yards
15 hectare = 166.66 bigha
20 hectare = 222.22 bigha

In my village the average harvest for sugarcane is around 90 quintals per bigha and the price comes out at an average at around 260 rupees per quintal from mills and small processing units combined.

Total production cost comes around 140 rupees per quintal and hence saving is also around 120 rupees per quintal.

Savings for 15 hectare comes around 17,99,928 bucks and for 20 hectare it is around 23,99,976 bucks. Let's take into consideration that they had 10% loss in crop, still in both cases the savings are over 16 lac and 21.5 lac respectively. Kisaan Credit Card (KCC) for both the farmers will be available with a limit of around 9 lac for the 15 hectare guy and 12 lac for 20 hectare guy - at 4% interest.

I hope now you understand how farmers manage to buy a Fortuner carrying money in cash in the boot of their Maruti 800 (We haven't accounted wheat and pulses here - that was only sugarcane based income)

Quote:
Suppose I was the seller.

I get a good deal and sell my car at an astronomical price. (The deal has to be dated prior to 8th November).

I put in the money in my bank account.

What about taxes? I have to pay taxes on the gain and income.

After six months, I buy back the car. And pay only the balance left (i.e. sale price received minus taxes paid).

This transaction will get reflected in my bank account, as I will be paying through my account (white).

How do I explain the transaction to Income Tax Authorities??

All transactions above Rs. 50,000/- are going to be reported to them. They may not take action immediately on those up to Rs. 2,50,000/-, but those beyond that will get scrutinised. And, I will be harassed by them. Is it worth the trouble?


BTW, your response seem to be inclined towards that there could be a rise in used car prices (at least in the premium segment)
1) The car is not sold today, it will be sold after 6 or maybe 12 months after all hoopla is over. Right now its just that the money has come and car has gone with some signatures on a pre-notarized stamp paper.

2) The date to exchange the notes is till 31st December. Anyone in his sane mind knows that it's more than 40 days still left and this much time is enough for an intelligent guy to adjust even an 8 figure amount.

3) If I am a businessman having white collar and my current account transactions in cash are running in multiple lacs per day (Jewelers, Toll booth contractors, Parking contractors, Garment merchants etc have this much transaction normally). You think these people can't put 10,000 per day with that money? There are many loss making companies on the paper which will become profitable after all this process is done. Don't believe me? November quarter is just to get over.

4) Now if I am selling my car at say 5 lac more than the market price and end up paying a tax of say 2 lac after showing a bit higher profits (I will show higher expenses though) then is it a good deal for me? Later I will transfer the ownership to the new guy as a gift or at dirt cheap price on paper. Government has no right to ask even if Is ell my BMW for 30 lac or 300 rupees; that's my car and I will decide its price. Additionally which day the CAs' are sitting for?
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Old 19th November 2016, 00:09   #99
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

Yes, the legal absurdities, arbitrarinesses, sophistries and self-refutations and self-defeatings of this couldn't-be-more-hare-brained 'policy', as also the wanton illogics involved in promoting, enabling black/grey money/markets and 'tax terrorism' and 'IT raid raj' and rendering the very value/price/legal-status-of-money opaque/uncertain, for a too-long time period to come when the ostensible rationales are their opposites....as i said: absurd.

"A nervous monetary disorder" gratuitously made-chronic now: for a long time to come. Sure there are and will be 'winners', 'losers' and those who're indifferent or at the 'median' point, including in the kangaroo-courts of 'public' opinion, BUT any form of overall social accounting, and i mean 'any', is and will find this a willful exercize in the absurd, over time and not just in this first failed 'phase'. At best. And i say this as an economist. The next phase, the phase-shift will see further absurd symptoms showup: such as renewed and intensified 'protection' racketeering and extortion by PRIVATE and not-just-'public' 'authorities'.

Which is why, outside of the Zaire-s and Zimbabwe-s such sudden and radical demonetizations have never been attempted or even contemplated. And every country has large cash components, even Singapore still does, even today. Money comes in innumerable 'forms' but 'cash' will (and should, even in Sweden let alone in institutionally-weak-and-distrusted India) remain of the essence for its impersonal, universal, un-intermediated and private nature.

What an epic political-economy sordid soap opera and melodrama, what an almost-pornographic new economic 'reality' being improvised, jugaad-de-engineered!
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Old 20th November 2016, 19:49   #100
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

New & used car retail to fall by over 30% in November. The auto dealers are writing to the manufacturer to reduce the dispatches looking at the situation

Quote:
The apex body representing automobile dealers fear that November retail sales for passenger vehicles will be affected by 30 percent while the numbers will further go down in December if things don’t improve.
Quote:
The situation is even worst at the service centers because of the lack of cash at the counter. However, many a time the reason is not lack of cash at buyers end but they (buyers) are either busy with other things that has crop up after currency ban or they are keeping the cash at hand for more important urgent things
Quote:
The used passenger car sales have been hit even badly. According to industry experts the sales are expected to go down by 50 percent, which may result into a revenue loss of about Rs 3,900 crore. The bigger impact is seen in the unorganised used
Link

Last edited by volkman10 : 20th November 2016 at 19:51.
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Old 20th November 2016, 20:55   #101
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

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Originally Posted by volkman10 View Post
New & used car retail to fall by over 30% in November.
Half the story or maybe 10% only. What about the multiple used car dealers as well as direct used car sales which directly fell into unorganized sector? Used cars are actually being bought by wise fellows from the people who are trustworthy so that ownership could be transferred later.
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Old 20th November 2016, 22:46   #102
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

Fantastic!!!

I truly welcome the news about new car sales falling by ~ 30%. Obviously, some manufacturers would be affected a lot more than others.

I guess certain manufacturers who were hit hard by the Hon'ble SC's temporary ban on diesel vehicles with engines > 2000cc in Delhi will be the ones facing the music again due to the demonetisation process! This is very welcome and I take it as a sign from the heavens above that payback time has started for the (in)famous diesel lobby of India.

The sheer influence wielded by the above-mentioned diesel lobby has to be observed to be believed! One particular manufacturer of the diesel lobby even declared very loudly that they were putting on hold all investments in India due to the SC's temporary ban, in an effort to shamelessly pressurise the GoI into backing the diesel lobby's stance in the SC, which the GoI certainly did.

Let's see if the same manufacturer (a core part of the diesel lobby), or even the diesel lobby as a whole, will now have the audacity to declare that they are putting all investments in India on hold due to the sudden decrease in sales across India (& not just Delhi) by ~ 30% due to the demonetisation process.

Of course, the diesel lobby had the effrontery to indirectly slap the Hon'ble SC on its face for its praiseworthy measures in the Delhi "gas chamber" case. Let's see if they can dare to do the same to the Hon'ble PM and his masterstroke called demonetisation!

Go on, diesel lobby, I'd like to see a repeat of your previous threats this time as well! In fact, I'm eagerly waiting for the mainstream media horde to back you completely and carry articles on how demonetisation is supposedly going to be bad for India's economy as a whole by giving out statistics about the diesel lobby's decrease in sales after that historic date (November 8).

Last edited by RSR : 20th November 2016 at 22:50.
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Old 21st November 2016, 07:37   #103
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

A sort of sado-masochistic pleasure-theatre i.e., a kind of political-economic 'pornography' is being enacted, 'realized' (in french that is the word for film/fillum direction!;-)) on 'epic' scale.

Believe me the 'diesel lobby' is just one of the ALL deeply affected lobbies, and it too comes in 2 avatars: the bs4 psu etc lobby and the bs6 jamnagar, gujarat one. The latter is a biggest-of-all lobby-unto-itself.

Point is the 'masterstroke' will gravely affect/cost even the lobby-of-lobbies (i.e., The Great Indian Middle Class, real and 'aspirational'), etc: hence my advised use of the term 'sado masochism', taking pleasure in both each other's and one's own economic pain, thereby being-grateful to the masterfully ill-advised (?) paingiver(s) who will necessarily deliver, on demand and with high supply-side elasticity, more and more such masterstrokes/pain=pleasure.

@RSR
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Old 21st November 2016, 08:17   #104
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Default Re: Effect of Rs. 500 / 1000 note ban on the Indian car industry

The impact is temporary, but huge. Expect a 30% drop in sales at organized place while in unorganized place it will go down by over 65%. There is demand, but buying has been delayed due to lack of funds.

Gujarat, Delhi and Punjab where the propensity to pay in cash is higher, sales may have dropped as much as 50% after the demonetization was announced on November 8.

Quote:
Manufacturers declined to reveal their estimates on sales loss, but said the impact was more in rural India.
M&M -As things stand today, more or less the impact is at an all India level, comparatively more impact in rural areas than other parts.

Honda cars
-drop in footfalls at dealerships could be anywhere from 10% to 50%. Conversion rates from enquiries to sales have also fallen.

Link
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Old 22nd November 2016, 13:18   #105
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Default Affected by note ban? 60-day bonus to repay your car loan

Acknowledging the cash crunch prevalent in the country due to the demonetization of Rs. 500 and Rs. 1,000 notes, the Reserve Bank of India (RBI) has allowed a 60-day bonus window for borrowers to repay their loans. All loans that are payable between November 1 and December 31, 2016, will be given the said bonus time window, before terming them as sub-standard, under Non-Performing Assets (NPAs). This relaxation is applicable for both - individuals and companies, who have borrowed loans up to Rs. 1 crore.

Under normal circumstances, loans that are not paid for in 90 days are treated as Non-Performing Assets (NPAs). The first category of loans under NPA is referred to as sub-standard asset. After the recent RBI order, an additional 60-day window has been provided to borrowers for repayment of their loans, over and above the 90-day period, before terming an NPA as sub-standard.

As a result, EMIs not paid between November 1 - December 31 won't be added to the 90-day period for terming a loan as a non-performing asset. However, all dues payable before November 1 and after December 31 will be covered under standard rules.

The Government of India has demonetized Rs. 500 and Rs. 1,000 notes from November 8, 2016. Since this decision, there has been a cash crunch in the market that is reported to have taken a toll on small businesses. The RBI has been receiving pleas asking for additional time to repay loans. The aforementioned step has been taken to provide relief for people whose businesses have been disrupted due to the note ban.

Source: Business Standard
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