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Old 27th August 2019, 09:49   #241
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Auto Industry was a bubble waiting to burst, it was an un-sustainable business model which had overgrown multifold. Compare it with industries like fire-cracker industry, plastic bags manufacturing units, wood/timber units & other industries that are fast becoming a burden on the planet both by polluting & consuming natural resources. Sooner or later either through people awakening or through various Govt. legislations this had to happen. How long can one hold on to an industry which is choking both the roads & the environment.

Downsizing is the way to go for this Industry. Companies which will realise this & cut themselves or evolve to greener technologies shall survive. Auto industry on the back of huge demand had overgrown to become a behemoth which would either fall on its head or face extinction(read dinosaurs). There is a time & age for certain industries to grow & prosper, the age of present auto industry without much innovations is over. In its prime the industry made humongous profits, took the prices of vehicles through the roof. How long could this have gone on, they were digging up their own grave!

Last edited by AWD : 27th August 2019 at 09:51.
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Old 30th August 2019, 08:20   #242
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

As slump in Auto sales continue, manufacturers go all out to drive sales in festive season.

A senior industry executive:
Quote:
In short, we have to walk to the customer, instead of them walking to us.
Quote:
Such activities have been used in the past as well, but the intensity has never been so fervent.
- Besides discounts, auto companies hold campaigns, outdoor events to attract buyers

- Hyundai Motor is using the portals of puja pandals as an opportunity to push sales

- Maruti Suzuki is approaching prospective customer segments like defence personnel and government employees with special offers.

- Others use car and bike melas, mall and airport activities, moving billboards and showroom on wheels in search of the buyer
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Quote:
Hyundai Motor has named its festive campaign ‘Celebrathon’, while for Mercedes-Benz, it is a ‘Wish Box’. The local unit of Toyota Motor has launched two financing schemes for buyers in the festival season: ‘Toyota Edge’ and ‘Toyota Smart’. Through the offers, companies are promising better value to prospective buyers, seeking to convert their intent into purchase.
Link
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Old 2nd September 2019, 11:50   #243
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

The bleeding plight of Auto Industry continues. The measures to arrest slow-down seem to have no effect on the downward trend of the industry.
Even with 2 launches, Hyundai could not buck the negative trend.

Commercial Vehicles & Two wheeler industry mirrors the same story.

August data:

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Link

Last edited by volkman10 : 2nd September 2019 at 11:53.
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Old 2nd September 2019, 12:43   #244
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

No matter what government declares now, I don't think there's going to be a drastic change in the market growth anytime sooner. On an average atleast I heard many people postponing their decision to buy a new car/upgrade from existing one waiting for BSVI cars. This must be the primary reason for customers holding back on their purchases amongst various other factors.

Many of us see this situation slightly in a different way, this is perfectly a right time to grab best discounts ever even on a brand new product and I've been advising many people the same.
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Old 2nd September 2019, 15:59   #245
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

This phenomenon is most likely sue to the anticipation for BS6.

I have a feeling that this decline will continue till April Next year, and then sales should pickup.
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Old 2nd September 2019, 16:47   #246
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by abhishek46 View Post
This phenomenon is most likely sue to the anticipation for BS6.

I have a feeling that this decline will continue till April Next year, and then sales should pickup.
IMO, BS6 would have effected a negligible impact to sales. Apart from markets like the NCR that are subject to unscientific NGT rules and a bunch of enthusiasts who've delved into BS6 more than pragmatically required, I don't think other prospective customers would be bothered about it at all.

Last edited by petroguzzler : 2nd September 2019 at 16:51.
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Old 2nd September 2019, 17:37   #247
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

RBI cancels registration of 12 NBFCs; 5 more surrender their licences
https://www.financialexpress.com/ind...ences/1690583/

This is also a reason for slowdown, not everybody is bothered about BS6. Easy credit is hard to find nowadays especially for unorganised sector and people with low credit worthiness.
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Old 2nd September 2019, 19:23   #248
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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RBI cancels registration of 12 NBFCs; 5 more surrender their licences
https://www.financialexpress.com/ind...ences/1690583/
While crisis is there in the NBFC space, I do not think many of those companies were active in vehicle financing.
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Old 2nd September 2019, 20:00   #249
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by Yeldo View Post
While crisis is there in the NBFC space, I do not think many of those companies were active in vehicle financing.
However these companies are financing a significant portion of the auto industry.

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In India, NBFCs have in recent years helped fund nearly 55-60% of commercial vehicles both new and used, 30% of passenger cars and nearly 65% of the two-wheelers in the country, according to rating agency ICRA.
How the NBFC crisis sent India's automobile sector into a tailspin
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Old 2nd September 2019, 20:42   #250
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Originally Posted by volkman10 View Post
The bleeding plight of Auto Industry continues. The measures to arrest slow-down seem to have no effect on the downward trend of the industry.
Even with 2 launches, Hyundai could not buck the negative trend.
---
More data on the PV scene for August as the industry moves to a >30% negative growth,

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Source:Business India

Last edited by volkman10 : 2nd September 2019 at 20:43.
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Old 2nd September 2019, 22:02   #251
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

I think we will see a rise in sales post April 2020, but in all possibilities gently used BS IV vehicles will come at a real VFM price which would sway in many first time buyers. I am infact waiting for my next VFM purchase post April 2020.
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Old 2nd September 2019, 22:08   #252
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Auto Industry has always managed to take sops from the Govt. but has never forwarded the benefits to the consumer. Important to mention this is a luxury industry & not an essentials industry e.g. a sector like agriculture, food processing, etc. Farmers across the country have been in distress since a long time, they get pittance always in the name of Govt. support. So many states have faced devastating floods & people have lost their living, how much Govt. support do they get! India needs to focus on bread & butter Industry, with this I mean the basic sectors. India needs subsidised Milk, wheat flour, lentils, LPG etc. We need cleaner & available drinking water, cleaner air to breathe. Just because its affecting the International bigwigs that it manages to get huge media attention & hue & cry, while the sufferings of many others are way more greater & need to dealt with.

A country's economy should never be dependent on a luxury sector specially if the sector has done nothing for the growth of the country. The dependence must wane to make the economy more robust in the long run/future. Citizens must stand behind the Govt. & not let it waste funds on an un-important sector. It was a wrong trend which was being set up, which needs to be changed.

I do not support Govts. move to replace Govt vehicles fleet with new vehicles or buy new vehicles, its a shear wastage of Tax money. If the Govt. wanted to do this, they should have ordered Electric fleet. Whats the fun doing it with petrol/diesel vehicles now when tomorrow you'd again be replacing with Electric!

Last edited by AWD : 2nd September 2019 at 22:11.
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Old 2nd September 2019, 22:14   #253
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Quote:
Originally Posted by NPX View Post
However these companies are financing a significant portion of the auto industry.
Of course, NBFCs finance a major chunk of automobile purchases, all right.

What I meant was that the 12 companies mentioned in the link you kindly provided were not involved in this segment in a significant way.
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Old 3rd September 2019, 09:15   #254
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Am surprised the GDP discussion hasn't come up yet. It's at 5 % which is too low for cars to sell in numbers. The slow down is not restricted to Auto sector alone, it's ripple effect is being felt elsewhere too. My father who works for a state run Steel Manufacturer received salary 10 days late than normal due to huge piled up inventories. My uncle who runs a School in Chennai says the cash flow in terms of fee collection has completely dried up. Rupee is depreciating and the list goes on.

I am sure this is definitely not due to BS 6 and EV alone but economy as a whole, the announcement on EV and BS 6 was just rubbing the wound with salt.

Last edited by Sk8r : 3rd September 2019 at 09:19. Reason: Better Readability
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Old 3rd September 2019, 09:38   #255
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Default Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Am surprised the GDP discussion hasn't come up yet. It's at 5 % which is too low for cars to sell in numbers.
GDP is at 5% after the current Government chose to change the parameters for calculation. It would be much lower if the older formula was in use.

Despite demonetisation, GST being touted as economic enhancers in various ways, they have proven to be detrimental to it through shoddy management. Though people argue that taxes are lower than the previous VAT regime, the amount of paperwork now involved and all the ancillary units and works also going through a complex pile of accounting, it has ensured that businesses are affected. Small scale manufacturers cannot afford such luxuries of having a separate accountant and then run to the auditor at the end of every month. It's a huge headache and an additional expense that strains gross profits.

Coimbatore is a manufacturing hub. Some of these industries are run by a single man at the helm who employs 5-20 people to work for them. He would make 50k to 1 lakh a month. He would do the accounting himself when time permits and submit his returns to the auditor who would file the same after scrutiny. Now, he has to hire a person to handle accounts which adds an expense of 10k, then monthly visits to the auditor (2-5k), if he's late in filing then penalty (5k+), has to run around to his suppliers to get his bills in time, etc. So more time, effort and money spent pursuing this, than on marketing or improving on his income. He can lose 30% of his gross earning without a clue and lose out on business opportunities too. 3 of my entrepreneur friends are today employed elsewhere. The total number of job losses would be about 25. They wouldn't even come under the GST gambit, but their business providers pressurize them to enroll for them to file their tax returns. They have to pay GST every month even though they get their payments only after 90-120 days.

The ease of doing business in India is a myth today. A small unsecured loan incurs an interest of 22%. For many, they wouldn't even make so much in profits.
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