[SideView]

Dealers who were customer centric or having deeper pockets survive.

Whereas others who were in it for quick money, coupled with the not so “rosy” economy are weeded out.

[SmartCat]

More bad news for automobile dealerships - funding from banks and financial institutions have dried up.
https://www.livemint.com/auto-news/n...881102353.html

Top lenders have decided to pare down their exposure to automobile dealers on account of increased defaults over the last two fiscal years, potentially delaying recovery in a sector struggling with weak demand.

Mounting bad debt in the auto sector has resulted in leading retail banks seeking a high collateral for inventory funding—at times, 100% of the loan—making a dire situation worse for a large number of dealers

Banks are being over-cautious because many dealers have invested short-term loans in long-term assets like real estate for showrooms and non-auto related businesses, and have subsequently defaulted.

[GTO]

Originally Posted by SmartCat

More bad news for automobile dealerships - funding from banks and financial institutions have dried up.

Trust Maruti to come up with an answer. While this might not take away the problems, it could make things a bit easier for Maruti dealers:

New Delhi, June 21 2019: Maruti Suzuki India Limited today announced signing of ‘Preferred Financier’ MoU (Memorandum of Understanding) agreement with Bank of Baroda, one of India’s largest public sector bank.

The MoU was signed between Mr. P S Jayakumar, MD & CEO, Bank of Baroda and Mr. Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India Limited. Present at the occasion were Mr. Ajay Seth, Senior Executive Director & CFO, Maruti Suzuki India Limited and other senior officials from both the organizations.

The partnership with Bank of Baroda will allow Maruti Suzuki to provide more comprehensive financing opportunities for dealers as well as customers. The dealer inventory financing will be done as per bank of Baroda’s existing product program of Supply Chain Finance.

Commenting on the alliance, Mr. Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India Limited said, “We are confident that this collaboration with one of India’s largest public sector bank will offer new-age banking and finance solutions for our customers and dealer partners. At Maruti Suzuki, we strive to deliver best customer experience and this new collaboration will help us in ensuring the same. I’m confident all our customers and dealer partners will take benefit of this new alliance.”

Sharing his thoughts on the alliance, Mr. P S Jayakumar, MD & CEO, Bank of Baroda said, “We are delighted to be associated with India’s largest passenger vehicle manufacturer - Maruti Suzuki India Limited. Given the huge potential available in the auto loan/commercial finance segment, we are hopeful that this agreement strengthens our presence in these segments and increases market penetration for Maruti Suzuki in India.”

[jailbird_fynix]

Maruti June 2019 sales down 16.7 percent

This is the 8th consecutive month where Maruti Suzuki India has posted sales decline and the 3rd consecutive month when the decline is in double digit. The biggest decline in sales was registered by the mini segment, which includes Alto and old WagonR range. Although, Maruti Ciaz sales increased by 47% in June 2019.



Source

[ashokrajagopal]

Now that we had 10 pages of discussion on this, and since it seems like there is no contention on whether there is a slowdown of some kind, how does this relate to the CEO salary we discussed a year back ?
indian-car-scene/Analysis-ceo-md-pay-median-salaries-worker-wages-indian-automobile-industry (Analysis: CEO/MD pay, median salaries & worker wages in the Indian automobile industry)

The CEO is paid so high to steer the company in the right direction to new heights, but in case of a slowdown, is the CEO paid more or less ? Or fired because the CEO couldnt see this coming ?

[ValarMorghulis]

Originally Posted by ashokrajagopal

Now that we had 10 pages of discussion on this, and since it seems like there is no contention on whether there is a slowdown of some kind, how does this relate to the CEO salary we discussed a year back ?

CEO salaries are like Maggie prices. They rise during high inflation but never fall back when inflation falls down.

[jailbird_fynix]

Originally Posted by jailbird_fynix

Maruti June 2019 sales down 16.7 percent

• Mahindra saw a 5 % drop in sales during June 2019. Mahindra claims that its latest launches: the XUV300 compact SUV, the Marazzo MPV and the XUV500 Facelift luxury crossover, together did quite well, holding up numbers for the brand. (Source)

• Honda saw a 41% drop in sales. Honda Amaze and City accounted for the decline in sales.(Source)

• Hyundai has registered a Year-on-Year decline of 7.3% in the month of June. The Hyundai Venue sales have, however, helped to restrict the sales decline. (Source)

• Toyota Kirloskar Motor domestic sales is reported at 19 percent decline. The Toyota Glanza has reportedly sold around 1,830 units. (Source)

[volkman10]

Trouble continues in the Auto Industry -Passenger vehicle sales: Continue to slide for 8th straight month.

- TATA Motors shows a decline of 27%



Link

[nkrishnap]

Originally Posted by volkman10

Trouble continues in the Auto Industry -Passenger vehicle sales: Continue to slide for 8th straight month.

- TATA Motors shows a decline of 27%

Attachment 1889350

Link

Most manufacturers are facing the onslaught of sales slowing down. Rationalisation was pending in an ever growing market.

PS: the table headers for year on year comparison has June 2019 for the current and past period.

[volkman10]

Auto Industry Downturn - Jobs at stake!

Auto sector applies brakes on new hiring, stares at downsizing.

The slipping demand has forced the original equipment manufacturers (OEMs) to curtail production, thus stalling hiring levels and wages.

The auto sector supports almost 37 million direct and indirect jobs and a truncation here will have adverse ripple effects across other ancillary industries such as rubber, steel and auto retail.

Statistically, on an an average every PV dealership has 100 direct and 100 indirect employees

According to the Federation of Automobile Dealers' Association (FADA) data, recently some 300 dealerships have closed.

Link

[tarik.arora]

Ok, this post can attract a lot of flak but i will still go-ahead with explaining my thought process:

Somehow i have a feeling that the current down-trend is a planned one (to an extent). No way i can believe that everything was ok till March 2019 (de-growth was far less) and then suddenly we see double digit drops. I think the industry is trying to arm-twist the government for reduction in GST rates on cars. This has been a demand since long and the government has never bothered to listen to them. The only way to make the government realise is to show the negative side of this industry.

In no way i mean to say that the whole down-turn is industry driven, but they are playing a significant role. Elections, high insurance prices, high interest rates, high fuel prices and what not has played its role but the OEMs are cashing on this opportunity to create an environment of fear for the government. Also, this gives them an opportunity to reduce their inventories and get benefited in the long term. Even if the top 4-5 players that control ~80% of the industry are aligned, the smaller and Niche players will automatically feel the heat.

For those who don't agree with this, remember what Parmish Verma once said: baaki jo marji hunda ho jave veere Par commentan ch gaal ni kadni

[ashishy]

Originally Posted by tarik.arora

Somehow i have a feeling that the current down-trend is a planned one (to an extent). No way i can believe that everything was ok till March 2019 (de-growth was far less) and then suddenly we see double digit drops. I think the industry is trying to arm-twist the government for reduction in GST rates on cars. This has been a demand since long and the government has never bothered to listen to them. The only way to make the government realise is to show the negative side of this industry.

Apparently, the industry is divided when it comes to their demand for GST cut:
https://www.moneycontrol.com/news/te...8-4123141.html

While SIAM (Society of Indian Automobile Manufacturers) is seeking a 10 percent reduction in GST to 18 percent, Maruti Suzuki Chairman RC Bhargava has opposed the proposal.

In February, SUV-specialist Mahindra & Mahindra’s (M&M) Managing Director Pawan Goenka echoed similar sentiments. Goenka had counter-argued that the current rate of GST on two-wheelers is at par with the earlier tax rate of excise and Value Added Tax (VAT) and does not require changes. [sic]

[tbppjpr]

Here is last 5 years chart of stock price of India's leading car manufacturer Maruti which tells a lot about the current situation of the induatry. Once smoothly sailing to touch the 10k mark, today hovering around 6.5k. Investors lost lot of money in the last one year.

[alpha1]

Originally Posted by tarik.arora

Somehow i have a feeling that the current down-trend is a planned one (to an extent). No way i can believe that everything was ok till March 2019 (de-growth was far less) and then suddenly we see double digit drops. I think the industry is trying to arm-twist the government for reduction in GST rates on cars. This has been a demand since long and the government has never bothered to listen to them. The only way to make the government realise is to show the negative side of this industry.

So you mean that the profit-hungry manufacturers are deliberately throttling down the production and cutting down on their sales, also reducing their profits as an after effect?

Let us assume this to be true, then there will be an increased waiting period after booking. Is that the case?

Lowering GST: how does it increase Manufacturer's profitability?

[fordday]

Originally Posted by alpha1

Let us assume this to be true, then there will be an increased waiting period after booking. Is that the case?

This is a good test of the theory. Can someone provide information on this?
If the demand is there and manufacturers are throttling supplies, I will assume there will be back market for cars.

Originally Posted by alpha1

Lowering GST: how does it increase Manufacturer's profitability?

It will bring down the car prices which will spur the demand.