[SpideyBoy]

Car is no more an aspiration, get ready for change: Asia's richest banker to auto sector

In a strong message to the auto sector, Asia's richest banker Uday Kotak today said Indian auto industry should get ready for structural changes as cars are no more an aspiration as they once were. Giving a personal example, Kotak Bank Chairman said his son depends on cab aggregators like Ola and Uber instead of thinking to buy a car.

Speaking at the Society of Indian Automobile Manufacturers (SIAM) annual convention, Kotak said customer preferences are changing pretty rapidly and car manufacturers should be ready for the onset of shared mobility.

He said the demand in the auto sector can be boosted in two ways though government spending and price rationalisation by the manufacturers.
He also asked the companies to look for export possibilities. "Weaker rupee helps in boosting exports and this is the right time for the auto industry to look at boosting exports," he said.

Source

[WindRide]

The pain will end with a flat line. Govt will over a period of time enfore a complete ban on all these ICE plastic dabbas. E-vehicles are what we will see in future.

[Durango Dude]

https://www.autocarindia.com/car-new...-market-414019

Looks like the rich get richer and poor get poorer scenario. Volvo has chosen India to launch its XC 90 Excellence Lounge, After seeing the success of the XC 90 Excellence trim. Priced at ₹ 1,42 cr. I think there's mainly a slowdown in the mass market vehicles whereas the luxury car makers aren't feeling the pinch as much as say Maruti.

[audioholic]

Originally Posted by Durango Dude

https://www.autocarindia.com/car-new...-market-414019

Looks like the rich get richer and poor get poorer scenario. Volvo has chosen India to launch its XC 90 Excellence Lounge, After seeing the success of the XC 90 Excellence trim. Priced at ₹ 1,42 cr. I think there's mainly a slowdown in the mass market vehicles whereas the luxury car makers aren't feeling the pinch as much as say Maruti.

Given the smaller numbers the premium manufacturers do, comparing YoY or MoM sales between them and the mass market players is not a fair comparison IMO. Of course, for a person who is able to afford a 1.5cr car, the slowing economy or financial crisis wouldn't be something that would put off a new car purchase. It's more for those who are directly affected by the economy, like businessmen, salaried persons who might be pushing the purchase of a new car. Would be curious to see the sales numbers of the German trio to get a better picture of how the past few months have fared

[SpideyBoy]

Auto industry seeks government help in smooth transition to BS-VI emission norms

Speaking at the annual convention of the Automotive Component Manufacturers Association of India (ACMA), SIAM President Rajan Wadhera said vehicle manufacturers and component suppliers were on track to meet stricter emission norms, but expressed concern over availability of BS-VI fuel across the country.

"The transition is very abrupt on March 31, both manufacturing and sales (of BS-IV vehicles) stop. This has never ever happened in anywhere in the world," Wadhera said.

It is extremely difficult to predict sales and plan inventories in such a way to have zero inventory on end of March, he added.
"This itself is giving speculation and confusion in customers and in huge loss for the entire auto fraternity," Wadhera said.

Turning to Minister of State (MoS) for Finance Anurag Thakur and MoS Heavy Industries and Public Enterprises Arjun Ram Meghwal, he said, "So sir, we request you to please look at this, and from time to time over the next few weeks we shall interact with you to give us a a possible solution to this very big complex thing which is coming."

Lots of investment and hard work have already been put in by both OEMs (original equipment manufacturers) and suppliers, he added.
Wadhera also drew the attention of the government to take a swift decision on GST reduction on automobiles ahead of the festive season

"We have an issue at hand with the festival season around where 15 to 20 per cent of the sales happen during this festive time. The revival of sentiment is very important," he said.

Source: ET

[indian21r]

Originally Posted by SpideyBoy

[b]
"The transition is very abrupt on March 31, both manufacturing and sales (of BS-IV vehicles) stop. This has never ever happened in anywhere in the world," Wadhera said.

Do our regulators/government think Cars are goods consumed the same day they are produced? Having a cut off date for manufacturing a BS-IV car is fine but saying sales should stop the same day is sheer stupidity.

With the current slump, manufacturers will not be able to even plan production properly. Only way out is stopping production of BS-IV cars way early. Expect to see more production shutdowns down the line. (I guess the off days will be used for retooling/ training etc).

The way the market is any hike in the prices is like nailing ones own hand. That makes launching the BS-VI variants very tricky.

Every sales/product manager must be wishing they were part of KIA rather than Maruti in the current market

[gauravdgr8]

Originally Posted by speedfreak01

I did observe something similar here this week while I had gone to dine out with my family last sunday at the DLF cyber hub,gurgaon. The place is usually packed on weekends but it wore a very deserted look that day and while all the restaurants over there usually have a waiting of 30-40 mins, this time there was zero waiting at all the restaurants and almost all of them were just half occupied. Upon enquiring with my server, he said that business has been low since few months. Food and entertainment industry is one industry I’ve never witnessed a slowdown in even during the lean times. But things seem different this time.

Blame it on Zomato/Swiggy/Uber Eats, compounded with binge Netflix, people just don't want to get up from their couches. To an extent, that's what's Ola and Uber have done to the car sales. Keeping second car is not liked by many due to the associated costs, specially when the second car is not a necessity.

Read what Uday Kotak said, his son doesn't own a car and travels by Ola/Uber. The choices of the GenZ has changed and they want to spend on experiences rather than commodities.

[raksrules]

Originally Posted by gauravdgr8

Blame it on Zomato/Swiggy/Uber Eats, compounded with binge Netflix, people just don't want to get up from their couches. To an extent, that's what's Ola and Uber have done to the car sales. Keeping second car is not liked by many due to the associated costs, specially when the second car is not a necessity.



Read what Uday Kotak said, his son doesn't own a car and travels by Ola/Uber. The choices of the GenZ has changed and they want to spend on experiences rather than commodities.

For the last part, I may be talking off topic here but I have planned to not have proper wedding (with numerous guests and functions) for kids (they are under 6 now) and although I cannot predict what will happen 20 years down the line but I will tell to not waste money on weeding and instead do a simple court marriage and use the money saved to see the world and spend on essentials.

[volkman10]

As slowdown continues, Auto Companies defer major investment plans.

Mahindra :

- Mahindra & Mahindra defers new investments, 15-20% of capex from original plan could be deferred

-Mahindra and Mahindra cut about 1,500 jobs of temporary workers since 1 April 2019

We are trying not to remove more (headcount) but if the slowdown persists, we will probably be forced to

Suzuki:

-Suzuki Motor India to hold back investment due to slowdown, BS-VI norms

-The company, which is the only two-wheeler maker to post double digit growth so far this fiscal, also uncertainty created over electrification of two-wheelers had also played a role in parent Suzuki Motor Corporation to adopt a wait and watch strategy before finalising on setting up a new manufacturing plant in India.

Auto Ancillaries:

- Auto component companies put $2 billion investments on hold, however, investments to comply with BS-VI norms will continue.

-Capacity utilisation has come down to 50-60% from 75-80% in normal situations, and this has already resulted in a loss of around 100,000 jobs

Source:ET

[nakul0888]

I think it’s safe to say that if the slowdown is primarily caused by greedy manufacturers jacking up prices just to gouge the consumers, they would have easily corrected their course and done right by their side now. I mean it’s harming their wallets as well. Let’s see what’s happening with prices

[PGA]

https://www.ludhianalivenews.com/fro...JiNdzHLCWLWSHo

I was trying to understand if this slowdown was impacting the second hand market, well some news today. This enables shortlisting of some causes and elimination of some.

[RM Motorsports]

Cars getting expensive, unaffordable: Maruti chairman RC Bhargava

At a time when auto sales have crashed to historic lows, Bhargava also blamed higher taxes on petrol and diesel and upward revision in road and registration charges by state governments for adding to the burden of car buyers. He added that a temporary cut in GST will not make much of a difference, and can be avoided.

The cumulative effect of the factors has increased the cost of an entry car by around Rs 55,000, including around Rs 20,000 through higher road tax in certain states, Bhargava said. And, the biggest issue is reluctance of the banking sector where officers are “very shy of taking the slightest risk” in terms of financing.

“The Indian car buyer is not like the European or the Japanese car buyer. The per capita income here is around $2,200, China has around $10,000, and Europe about $40,000. How do you compare with those people? But when it comes to regulations, everybody in India says we must have the best regulations … you have to look at the affordability of a product considering the Indian level of incomes and not somebody else’s level of income.”

https://timesofindia.indiatimes.com/...w/71057677.cms

[AWD]

Originally Posted by PGA

I was trying to understand if this slowdown was impacting the second hand market, well some news today

It would have impacted the 2nd hand market because one of the causes of slowdown has been the 10-15yrs lifecycle of a vehicle. With a new car one gets the entire period but there's further cut with a 2nd hand purchase. For example in the used car market one would get models from any year, 2001-present. So if one would have selected a 2011 model diesel car, due to the un-certainity in Laws, one could be viewing at a potentially only 2-3yrs of ownership. So practically why would someone make such an investment.

On the sidelines, I've seen the Ludhiana used car market, it used to be full of crap collected from entire State & Delhi. Dealers have collected huge stock from Delhi, where consumers were discarding old model cars due to 10/15 yrs rule. As such people in Punjab have lesser affinity to Delhi number cars as they are thought to be not in good condition.

[Ithaca]

Auto slowdown: The lady doth protest too much, methinks!
Mr B V R Subbu, Business Today 21.08.2019

Running to the government cap in hand, at the first signs of a business downturn, hardly behoves such well-established industrial giants.

On the other hand, I have been reading statements by Indian auto industry people calling for a reduction in GST rates and a variety of other support packages, ostensibly because tens of thousands of jobs are likely to be lost if the slowdown continues. Coming from an industry that has been at the forefront of running regular operations with contract and casual workers, this concern for jobs and employment, is a little rich. Running to the government cap in hand, at the first signs of a business downturn, hardly behoves such well-established industrial giants. At the risk of sounding harsh, it eerily reminds me of how the CEOs of America's Big Three automakers flew in their corporate jets to Washington in November 2008 to ask the government for a bail out, and were relentlessly pilloried both by the media and the political executive for that display of habitual profligacy.

Has anyone totted up the gross profits of India's top three car makers and the top three 2-wheeler manufacturers over the last ten years? If I recall right just the top three 2-wheeler manufacturers made more Rs 12,500 crore in gross profits last year. One would imagine that an industry that has had such an unprecedented and extended run of profitability for almost a decade, would have enough cash reserves to tide over a dip in fortunes of the sort that we are presently witnessing. Not a meltdown by any standards, what we are seeing is merely a reduction in profitability that is sought to be painted as an apocalypse scenario.

And again this time round, the burden of the auto industry's song seems to be that a variety of increases in registration charges, taxes, fuel prices and insurance costs has made the ownership of personal vehicles unattractive, leading to a protracted slump in purchases and thus creating the threat of a dab of red ink on the well-maintained balance sheets of the industry. That is, at best, a trifle simplistic. We have had periods in the past where each of these increases have been absorbed by consumers, and sales of automakers continued to grow. What is then different this time around?

A combination of higher future income expectations and the wealth effect has driven consumer spending particularly for personal vehicles. Clearly this very combination in the reverse is now holding back and constraining demand, and has been doing so for at least the last year. We are presently witnessing a full-fledged business downturn with whatever little growth there is, probably salvaged primarily because of the huge Government sector and the consequent showing of the services sector.

With the majority of sales teams in the auto industry believing that billing to dealers is equal to sales, a shadow banking sector willing to bankroll dealer inventories and a dealer fraternity too scared to resist unprincipled billing, the day of reckoning has been consistently pushed forward. And then, dealerships across brands started defaulting first and then going bankrupt eventually. The inventory funding dried up, dealers with overflowing stockyards threw up their hands, and the music stopped for auto manufacturers. Is today's problem then partly also a creation of the myopia of the industry?

Source: Business Today 21 08 2019

Powerful words by an ex-Industry insider.

Taken in light of what the Finance minister said today about Millenials using Ola & Uber (Maybe she has read a thread about this very topic on our forum), his words do matter.

[chinkara]

Ithaca, agree completely.
The auto slowdown is recession, period. And industry feels things will pick up by middle of 2020 when BS 6 and associated pricing stabilizes, the rising farm incomes trigger rural recovery which in turn will create positive urban sentiment.

I see no point in GST reduction. Band aid for cancer.