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Old 3rd July 2019, 18:05   #151
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by alpha1 View Post
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?
I never said that lowering GST will improve profitability. With the safety norms and then emission norms coming into play, vehicle prices will hit the roof, there by hitting the demand. Lowering the GST will help OEMs control the price increase and thus help in sustaining the demand. Sustained demand will help OEMs in the long run.

Let me give you an example of Japan where the VAT was hiked in 2014 and the industry suffered in double digit. The next hike is planned this year and the industry is expected to suffer not just this year but for years to come. I see similar effect in India if prices are not controlled and one way of doing that is through GST reduction.

I know my theory sounds weird but OEMs are ready to accept a short term loss to support the industry in mid to long term. Anyways, this is just my theory. Let us see how things pan-out.
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Old 3rd July 2019, 19:23   #152
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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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
I agree that this test is right but the time is not right. Let me try and explain:

Demand / waiting is a factor of supply. Now, supply can be from current production or plant inventory or dealer inventory. We know that the industry is going through an inventory crisis with average dealer inventory of over 35-40 days against an ideal period of 3 weeks. The retail (customer) demand is partially getting fulfilled through this inventory at the moment (plus excess plant inventory). We will never come to know till a couple of months, however, this test will reveal its results in a month or two when the inventory will rationalise and then if OEMs try to throttle the supply, waiting periods will jump.
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Old 5th July 2019, 09:12   #153
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

June 2019 overall sales (Source - Autopunditz)

Mahindra was the only OEM to register a positive YoY growth.

Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost-1.jpg

Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost-2.jpg

Last edited by jailbird_fynix : 5th July 2019 at 09:16.
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Old 5th July 2019, 10:28   #154
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Tata Tiago, Tigor production cut by 50 percent as inventory increases.
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production of these two models will continue at this pace till the end of the August, as the company has noted a fall of 27 percent in June 2019 both in terms of passenger and utility vehicles. In view of these piling stocks, the company has also offered discounts on the Tiago and Tigor.
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Old 5th July 2019, 14:36   #155
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Source: AutoPunditz and ET

Mumbai witnessed the biggest closures followed by New Delhi

Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost-fb_img_1562309647331.jpg
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Old 6th July 2019, 08:00   #156
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

I finally got some time to do some research on our Industry Crisis and made a vlog yesterday, obviously major points were taken from this thread.



I will also include my thoughts here in this thread.

10 Reason's for the Crisis

1) Car's becoming abnormally Expensive : Reason's are greedy manufacturers for high profitability and an equally greedy govt with their high taxes but fail to return it in terms of better infrastructure for us. Inflation can not be factored in because purchasing power of people never increased all that much for the majority during the same period.

2) Depreciation : Car's are highly depreciating assets so it makes no point for people to sell their car's before 8-10 year's. Since car's today are also more reliable than before.

3) Automobile Industry a Victim of Hasty govt Regulations , Green Tribunal and Supreme Court : 10 year Diesel Car ban , mandatory purchase of 5 year 3rd party insurance with new cars and direct jump from BS-4 to BS-6 emission norms have directly affected sales.

4) Shared Mobility : App based cab hailing services have clearly disrupted the Industry especially in cities. It's much cheaper and convenient to use these services than owning a car.

5) Congestion : Less parking space in Apartments and roads , High traffic have made people re-think purchasing another car.

6) Slump in IT Sector : Most of the sales happened when IT sector was at it's blooming stage. Now it's down and so are the jobs and pay packages. People would choose job security over spending.

7) Economy is weak in reality : No matter how good media and the govt want to portray the economy in great light with high GDP numbers like 7%, the economy is struggling with many business's and small scale industries shutting shop ever since Demonetization and GST that sent a sudden shock through the system. The effects were very slow and we are witnessing it's impact now. Unemployment is peaking at 7.6% annually too.

8) Business's in general are under performing : Businesses in India are just highly leveraged balance sheets, with no control of fund diversions and no fear of repayment of loans. This would have to end at some point in time and it's happening now for those who were not ethical.

9) Youngsters changing Mindset : Youngsters today want to spend on a more quality lifestyle like spending on travelling to exotic locations rather than spending a huge amount on vehicles.

10) Elections : Liquidity crunch was created due to election but it would have affected only the last 3-4 month's sales.

SOLUTION 1 : Manufacturers have to stop being greedy and reduce their profitability margins, like a lot.

Government should appoint an expert committee of members from the automobile industry and start a separate government department overlooking just the automobile industry so that they can revise the tax system and also not bring in regulations that disrupt it from time to time.

SOLUTION 2 : Let it Rust Campaign ! This can only put the prices back in check and make the government look up and pay some attention to this industry seriously. Also especially after seeing yesterday's budget I believe this is the one and only solution now.
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Old 6th July 2019, 08:47   #157
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by stanjohn123 View Post

SOLUTION 1 : Manufacturers have to stop being greedy and reduce their profitability margins, like a lot.
This is a huge factor. Over the last 5 years, car prices have gone up like crazy. Component price hike, inflation etc can only account for so much of this hike. But it is evident that many car makers have just got too greedy, unless compelled by competition to offer discounts or exit the market. Simple case in point is the Hector. An ex-showroom price diff of close to 5-6L between the Top variant of the Hector diesel and Compass diesel and close to 10L difference between it and the recently launched Trailhawk. Addition of an AT box and 4x4 drive cannot account for 10L certainly.

Same goes for many other cars. The way segments have jumped almost a whole price bracket is alarming. The 9-12L C+ segment cars have now entered the 15L price bracket, what was essentially the D segment, in the process killing the D segment. The take home salaries have not increased at such an exponential rate.
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Old 6th July 2019, 10:38   #158
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by drmohitg View Post
The way segments have jumped almost a whole price bracket is alarming. The 9-12L C+ segment cars have now entered the 15L price bracket, what was essentially the D segment, in the process killing the D segment. The take home salaries have not increased at such an exponential rate.
I agree, what's more alarming is we as customers are starting to find these prices VFM. Best example is the Venue, they cleverly marketed the bluelink connectivity on their AVN Telematics HD touchscreen (mind you it's not Visteon or Alpine). They projected the car as a highly premium best in class product with this and at the price launch many of us including me felt it VFM until I looked the car in person and came to my senses. No offense to anyone, It's not that the car is bad and finger pointing at one particular manufacturer, it's the latest example I could think of and every manufacturer is no different.

I believe it's not too hard or costly to bring in gizmos to the car of only someone could give a breakdown of how much would a nice capacitive touchscreen infotainment could cost, how much would go into the software development in it which are mainly on HTML5 and Android. I believe the prices of a car now are just like how computers are two decades ago. A CRT with a whopping cost of 40-50k was how it was initially. It came down when one started to buy individual parts and get them assembled. I hope any such revolutionary change comes up with car prices before we completely succumb to their gimmicks.

Last edited by SpideyBoy : 6th July 2019 at 10:47.
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Old 6th July 2019, 18:43   #159
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Quote:
Originally Posted by drmohitg View Post
This is a huge factor. Over the last 5 years, car prices have gone up like crazy. Component price hike, inflation etc can only account for so much of this hike. But it is evident that many car makers have just got too greedy, unless compelled by competition to offer discounts or exit the market. Simple case in point is the Hector. An ex-showroom price diff of close to 5-6L between the Top variant of the Hector diesel and Compass diesel and close to 10L difference between it and the recently launched Trailhawk. Addition of an AT box and 4x4 drive cannot account for 10L certainly.

Same goes for many other cars. The way segments have jumped almost a whole price bracket is alarming. The 9-12L C+ segment cars have now entered the 15L price bracket, what was essentially the D segment, in the process killing the D segment. The take home salaries have not increased at such an exponential rate.

Car prices have kept pace with inflation, that's comes in at nearly 60% over the last 7 years. These are official figures, in 2012, a fully loaded Verna cost 11OTR in Kerala. Today, its around 16.5 with better kit and higher road taxes, if anything that's cheaper.

The problem is not greed on the part of the car makers, who are in it to make a profit. The issue is the governments have done nothing to improve purchasing power among first time car owners. The lack of interest in cars is only among the urban elite, in rural areas cars are still very much aspirational. The latest budget is another example why car sales aren't going anywhere soon. There is a rebate for non existent products, imagine how long it will take to get a decent charging infrastructure in a country without clean toilets on tolled highways.

Last edited by manson : 18th July 2019 at 15:00. Reason: Typo.
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Old 7th July 2019, 14:14   #160
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by avira_tk View Post
The issue is the governments have done nothing to improve purchasing power among first time car owners. The lack of interest in cars is only among the urban elite, in rural areas cars are still very much aspirational.
The problem is purchasing power has not increased in general for the majority. That is why sales are slumping even in rural areas.

Also the main source of income in rural areas is Agriculture which is totally sidelined by all governments. There are no concrete steps to develop it except giving away free money. This will not help with anything.

Last edited by manson : 18th July 2019 at 15:01. Reason: Trimmed quote.
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Old 11th July 2019, 08:36   #161
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

I was keen to know and understand the impact of this slowdown on second hand car and bike market both in terms of number of sales and the price.

Theoretically, if the slowdown is due to poorer purchasing power ability then secondhand market also may have taken a dive but if this slowdown is due to excessively priced products then second hand market should be on upswing.

Since it's a unorganised market I am not sure if some numbers are available. Maybe word of mouth or empirical information could throw some light on the situation.
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Old 11th July 2019, 22:00   #162
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I don't think manufacturers are greedy, with their infrastructure, operational costs, manufacturing expenses except top two players all others are struggling to stay afloat.

Some 10 months back when my cousin bought a Jeep Compass 4x2 Limited (O) the OTR price in Chennai was around 24 Lakhs. When I went through the invoice of the vehicle it was around 13 lakhs ex - factory. I did not find 11 Lakhs worth to pay for road taxes ( when tolls are collected almost every roads except major cities).

Duties: I am not sure where it goes in reality
Insurance: Whatever be it, we are made to pay saying this will not cover, (your plan doesn't cover that)

After all these the sky high fuel costs! (Again how many taxes, duties, cess inside a liter of gasoline) don't even makes one to think of driving to any location.

Instead of manufacturers, it's the government that has to act fast. Consumer are well aware of VFM and over priced cars and they can decide on which one to buy, but government policies aren't so.

Mod Note: Please proof read before you post

Last edited by ampere : 11th July 2019 at 22:08. Reason: Formatted post for readability
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Old 13th July 2019, 21:26   #163
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

For the past few years, income tax slabs have not been reduced and the salary hikes have been into lower single digits. Housing cost is high and so are the EMIs. There is either a fear of job security or a thinking of job portability. In all these melee, buying a new car is not going to be a priority at all. Even if the govt had reduced the GST for cars, I dont think it would have made a difference. Top it all with one rupee duty on fuel that was announced in the budget, it is not going to change the scenario anytime soon.
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Old 16th July 2019, 07:11   #164
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Ashok Leyland temporarily shuts Pantnagar plant .


Quote:
The Company's Plant situated at Pantnagar will remain closed from July 16, 2019 to July 24, 2019 (both days inclusive), owing to weak demand and outlook for the industry
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Old 18th July 2019, 10:29   #165
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Slump continues even for 2-wheelers in June 2019; only 2 OEMs (Suzuki & Kawasaki) show positive YoY numbers, rest show decline in YoY numbers.

Source: Autopunditz

Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost-june20192w_sales.jpg
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