[drmohitg]

I wonder if the NGT rule also contributed to this. NCR has always been a very big market for car makers and I have seen the general perception now of more people shying away from adding an extra car to their garage or opting for a from a lower segment because it loses value quite quickly in the NCR now and the total cost of ownership is huge for any car costing 15L and above. As a result more people are holding on their vehicles till its last year and others relying on OLA/Uber.

[CARDEEP]

Originally Posted by drmohitg

I wonder if the NGT rule also contributed to this. NCR has always been a very big market for car makers and I have seen the general perception now of more people shying away from adding an extra car to their garage or opting for a from a lower segment because it loses value quite quickly in the NCR now and the total cost of ownership is huge for any car costing 15L and above. As a result more people are holding on their vehicles till its last year and others relying on OLA/Uber.

The NGT order/ ruling is a benefit for manufacturers & their sales channels IMO. The earlier cars are discarded, the earlier customer walks back into dealership for replacement. I see over 90% of people going this way. This brings in more sales to companies.

We also need to understand NCR is approximately 200 Kms in radius. The enforcement is applicable for people entering Delhi on regular basis, which means either they have car of valid age or pay thousands on being caught. Most people will buy new cars & pay installments than fine amount to traffic police. BTW NCR is a big market & can easily beat other regions in terms of auto sales, if we disregard state boundaries.

[Turbanator]

Originally Posted by CARDEEP

The NGT order/ ruling is a benefit for manufacturers & their sales channels IMO.

I doubt this will bring more customers and on the contrary, most of the guys in NCR are wary about the 10 Year life on Diesel. I mean who will want to invest in a product that becomes close to Zero in 10 Years? NCT ban should have been on vehicles not meeting Euro 4 emissions rather than age.

NCR is a big market & can easily beat other regions in terms of auto sales, if we disregard state boundaries.

Correct and do realise that this 10 Year ban is not going to help Diesel vehicle sales which should be over 50 % in NCR in my opinion.

On the subject, I can think of a couple of reasons, Election time and uncertainty on the shape of the new Government, less availability of Cash/ Liquidity in the market. Regular increase in Road Taxes/ GST has not helped the things either. Nowhere in the world, after paying 35 % Income Tax, people have to pay 50 % GST and then some 8-12 % Road tax. It's a high time that the Government realise this and try to reduce GST and include Road taxes with GST.

Lack of infrastructure is also an issue, as an example, there is still only One Road connecting Chandigarh/ Ludhiana with Delhi and that has been the case since ages (16th century!) It still takes me 5 hours in a 6 cylinder BMW to travel from Gurgaon to Chandigarh, the same time it used to take 30 years before in Haryana Roadways bus or Ambassador! A person like me who will change a car in a Year or Two now finds no reasons to change/ upgrade as the traffic has increased multiple times over. A lot of money collected in the name of Infrastructure/ Cess is probably lying unused or spent elsewhere.

[Abhejit]

Agree with the above. Fundamentally, India has not shaken off its socialist mindset and legacy. This mindset has always focused on calling corporates the villian, making profits an immoral act, taxing the rich to dole the poor, and inefficient government finances. Even in these elections, a national politician's election campaign has focused a lot on this demonization of corporates.

India is among the world's fastest growing aviation markets, giving double digit passenger growth, bringing its tier 2, 3, 4 cities on the aviation map at rapid pace, and your Boeings and Airbuses can't stop dwelling on India needing hundreds of planes in the next decade. Yet, this market has its national carrier sitting on billions of debt, and watched its two largest private airlines - Kingfisher and Jet Airways shut shop. I believe this is partly due to our ancient socialist policies that taxed the hell out of this sector, and put innumerable restrictions on its growth.

Sorry to digress but I believe something similar is happening in the auto sector. More knowledgable members could correct me but I feel India's RTO charges for a new vehicle are very high, then add GST and other taxes, and a new vehicle's on-road price goes way above one's budget. And honestly, I find the car manufacturers displaying this same mindset, by pricing their cars out of the reach of everyone. Then they'll continue to raise prices through the year citing rising inputs costs, or blame BSVI or India's new safety regulations.

I would consider India is still a sunrise car market, and Indians' disposable incomes are continuing to rise. Also, credit is still there, especially for those with good credit history, but these issues need to be sorted, especially at policy level.

[yogeshsom29]

While painful & factually correct, the optimist in me asks, does it gives a complete picture or just a cyclical business trend. All are absolute numbers & we may get a different story if,

• we look at percentiles against the entire dealership universe
• we also look at figures of newly opened dealerships in last 2 years
• we get a brand-wise & city-wise dealer shutdowns as most of them will be of low volume brands

Tata has been on an upswing in last couple of years which implies their dealers, ideally, may not be bleeding (or rather making money) as compared to yester years, Maruti opening more NEXA showrooms & now MS Arena, Mahindra having promising product launches.

Also, if we see the maximum shut downs are in places where real estate cost is extremely high & makes operations unviable for someone with not so deep pockets or robust business model; I have seen few dealers/brands shutting shop only to open a little far ahead where the rentals value are more digestible or for want of a better retail location

If we discount this March- April, overall the Top 7 OEM’s posted positive growth last year on YoY basis (even if marginal)

there is a slowdown & of course there are factors like inflation, elections , lack of VFM products, impending BS-VI norms, priorities (changing consumption patterns), cab aggregators, infra issues, tight liquidity, farm distress but as a country we are at very low penetration levels when it comes to private vehicles & there is a huge potential

This is surely a lean or even consolidation phase where only serious players with healthy working capital will thrive & yes, honest & friendly service will be the key differentiator for people in this business as that will ensure continuity in customer relationship. (Revolutionary products is not in their hands & hence not including it as a success mantra for dealership business).

[GTO]

Thanks to a Team-BHP Fan (who prefers to stay anonymous) for sending this information in. Heartfelt gratitude for sharing it with other enthusiasts via this Team-BHP page!

The dealers that have shut shop in Delhi/NCR in the past one year...

Audi Delhi West
Sterling Mahindra - 4 outlets
Sterling Honda in East Delhi
Raj Hyundai
Ridhi Ford
Hana Motor Plaza Hyundai
Delight Honda Mathura Road
Delight Honda Faridabad
Grace Toyota Saket
Grace Toyota Gurgaon
Grace Toyota Rewari
Galaxy Toyota Defence Colony
Audi Gurgaon
Audi Central
Porsche Gurgaon
Siddhivinayak Maruti Bahadurgarh
Renault West Moti Nagar
Renault South East Of Kailash
Renault Adchini Delhi
Renault Gurgaon Sohna Road
Renault Noida
Pearl Honda Gurgaon 2 outlets
Pearl Honda Noida
Nawab Skoda Noida
Jai Skoda Peeragarhi
Jai Skoda Bikaji Cama place
Marketing Times Maruti GK-2
Volkswagen Peeragarhi
Volkswagen Faridabad
Volkswagen Saket
Volkswagen Okhla
Treo Nissan
Pahwa Tata Motors Safdarjung
Pahwa Ford Lajpat Nagar
Lexus Gurgaon

And many more in the pipeline

[Highh5]

Originally Posted by GTO

Thanks to a Team-BHP Fan (who prefers to stay anonymous) for sending this information in. Heartfelt gratitude for sharing it with other enthusiasts via this Team-BHP page!

Believe me this list is just covering Delhi and not NCR in proper.
Recently, in Meerut one of the biggest dealer of Maruti Suzuki (Raj Sneh) who have a functional NEXA Sales and Service center too, went bankrupt and shut the shop.

[pf007]

I am a new kid in the block and finally blessed with the membership recently after may be 6-7 years of follow ups. Excited to be the part of this community.

I see good debate on the the below subjects and want to contribute my little knowledge.

OEM doesn’t manufacturer VFM cars;

Medium and up cars falls into 28% GST + 15% Compensation Cess + 12 % Registration (Average of states) + upto 8 % with new 3rd party + 1 % TCS. Totalling to about 64% taxes and duties. A humble one Million INR car has paid 6,40,000 to Govt agencies through different means before getting a final hand of customer.

This slab structure is one of the highest in the world if not first.

I think major GM cars were VFM and never priced abnormally high still they have to exit. (Though a different discussion all together)

But as the debate is on decline in cars sales due to high prices - Yes it definitely contributed to the blood baths of OEM’s.

https://economictimes.indiatimes.com...w/64692144.cms

BS 6 compliance from April 2020.

The new norms has been adopted by developed nations to reduce Air pollution, even if it is marginal these nations can afford for fresher air to breath. In India 14% is total contribution to Air pollution by all modes of transportation, I guess would be in single digits for cars.

BS6 engines will add a lot to the already anxious state and diesel would go 1.5 Lacs hard on pockets. The recent statements by few OEM’s to stop Diesel cars is the outcome for these calculations.

I think this industry is a soft target, mainly expacts at the senior level of all OEM’s. They can only write emails and not into highway blocks, press conferences and shut downs to make their voices heard.

[Theyota]

If a Maruti retailer has gone bankrupt, then he should have never ventured into that business. No matter how low the margins are in new car sales, there is enough volume and more importantly, huge market for after sales service business.

[pf007]

Originally Posted by Theyota

If a Maruti retailer has gone bankrupt, then he should have never ventured into that business. No matter how low the margins are in new car sales, there is enough volume and more importantly, huge market for after sales service business.

Average Maruti dealer has close to 800 cars in stocks and then the dead stocks, penal interests, salaries and other sales expenses eats up the after sales share. Few dealerships rentals goes up to 30 lacs / month.

Deep rooted own funds is the key to survival and that depends case to case !

[Arjun Reddy]

Came up on this article on Economic Times. Interesting analysis on the down trend in the economy.

http://www.ecoti.in/QvblQa49

[centaur]

I think that the current situation can be attributed to a number of things.

1. For bigger players like Maruti, there is a showroom at almost every nook and corner. Not all of them can expect to have huge volumes. It is but natural that some of them would shut down.

2. The availability of OLA/UBER is a major contributor for people not buying cars. Forget buying cars, I know people who leave their cars at home and hail a cab ride to any place they want

3. Parking is a big issue if you take your cars and if parking is available, the charges are exorbitant. There have been instances where hailing a cab ride to and fro works cheaper that driving your own car and parking it at a paid parking.

4. Given the current traffic scene in the country, people just do not wish to drive. The exponential growth of real estate has meant that many people have seen sudden money and think no end of themselves. They are willing to pickup a fight at the drop of a hat. Anyone can avoid this by just taking a cab ride and let the cab driver get into the mess if need be

5. The maintenance/upkeep cost of a car is again something which people do not wish to spend on. They can rather use that money for cab rides

6. In the scenario that a person wants to drive, they always have Zoom/Drivzy/Hertz etc. to satisfy that urge. The current thinking is that why invest in something which will get used for maybe, an hour in the morning, an hour or two in the evening and lie idle the entire day, that too when it is a depreciating asset. Weekend and holiday trips can be done using a cab or using the self drive rentals

7. And the most important of them all - the Millennials do not wish to own a car or a house (Link (The Cheapest Generation - Why Millennials aren’t buying cars or houses))

When I purchased my car 6-7 years back, I wanted to change it within 3 years. With added responsibilities, it changed to 5 years and now I feel, why do I need to change as long as it works fine with regular maintenance. Even if I do, I doubt I would go for a new car and would go the pre-owned route.

Having said that, while new cars sales might be tanking down, I have seen a surge in the number of used car dealerships that are coming up. I can see one every 500 meters or so which was not the case earlier. The used car industry is booming like anything and almost, every 2nd or 3rd person I know is going the pre-owned route.

[aniyo]

Most of the young crowd has moved on from the concept of buying car. My wife never cared if we were driving a Brio or Nexon as long as it got her to the destination. She heavily prefers cabs over driving.
Now people who are buying their 2nd or 3rd car have a dilemma. Few years back we used to get decent car for the money. Today for the same price we get a segment lower for no reason.
2011 we had the Cedia with multi-link suspension and good tyre setup, Honda City had disc brakes we could get loaded proper sedan under 10 Lakhs. Fantastic to drive Fiesta.
And most of the cars had good built quality, even Maruti and Honda.

8 years later, we get a hatchback with compromised quality for 10 Lakhs with neither disc brake nor multi-link suspension, heck even Octavia comes with Torsion beam, barring the 1.8TSI.

I am pretty sure all the sedans we have in the C2 space have exactly the same platform that we got in 2011 (City, Verna, Rapid, Vento) and same engines.
All car companies have done is added few convenience and few gimmicky features and raised the price. For any electronics, larger the volume lesser per unit price.
What does the 15-16 Lakh Honda city offer over the 8-10 Lakhs Honda city of 2011. Same for each of the cars.

I see people holding their cars for longer as they just don't see the benefit of plonking nearly 60-70% more money from their Old cars and getting similar or inferior car within the same segment.

People like me who are upgrading from a small hatchback may find some decent cars in 10-12 Lakhs segment (mine did not have ABS or airbags). For rest hold on till the car nearly junks, pretty much going back to 90's mentality.

[am1m]

Originally Posted by aniyo

My wife never cared if we were driving a Brio or Nexon as long as it got her to the destination. Few years back we used to get decent car for the money.

Both points resonate with me. I've never cared about the size of the car. To me, the smaller the better- makes parking and maneuvering in the city much easier. Since it's just the two of us, I don't think we'll ever need a sedan or an SUV. (A Gypsy would be a dream buy though... )

Also, I do think most of the new cars are overpriced. Nothing drastically better in them compared to what was available 5 years ago, but my perception is that the price jumps have outstripped what can be reasonable explained away by inflation or input cost increases.

We have always been a family that holds on to our vehicles for over 10 years each because of usually pretty low annual running. The new car will be no different and in 10 years, I expect to stay with the same segment instead of 'upgrading'. Maybe even electric, if the e-vehicle ecosystem is properly in place by then.

[AkMar]

Originally Posted by centaur

I think that the current situation can be attributed to a number of things.

Very nicely summarized, centaur. I second all your points.

I agree, lack of VFM is a major major factor these days. Picture this, in 2010 we bought Swift VXI for 5 lakhs on road. Now VXI touches 7 lakhs on road. It does get few more features and ABS Airbags standard, but even considering that and inflation, a 2 lakh rise is not justified at all.