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Old 7th May 2019, 14:39   #76
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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 pf007 View Post
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.
Thanks for this. Precisely the point many have made about the auto sector continuing to bear the brunt of India's taxation policies continuing from the Nehruvian socialism era. It is all a game of margins, and I can perhaps understand this could be a factor why so many foreign car manufacturers are finding it so tough to survive here.

It is noteworthy that despite having among the highest vehicle taxes in the world, India has such a massive demand for vehicles - shows the massive buying power that Indians possess, which will only grow in the future.
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Old 7th May 2019, 14:57   #77
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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 pf007 View Post
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 !
Most Maruti dealers have multiple outlets spread over multiple cities and they maintain a central inventory. The ones who maintain that kind of inventory are also the ones who are able to sell more than that in a month. If they aren’t able to sell that many in a month, then it is plain stupid to maintain that kind of inventory. This is why I said, the ones who are not able to generate profits from selling a Maruti will not be able to generate profits from any other dealership.
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Old 7th May 2019, 21:22   #78
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

This is something shocking for me! Hana Motor Plaza was one of the best dealers in NCR. We purchased our i20 from them way back in 2016. The dealer was recommended to us by a family friend, and we too recommended this particular dealership to atleast 5-6 people who were planning to buy a Hyundai car. Delight Honda is (was) also owned by the same gentleman, and both the dealerships shared a common wall. I guess the Hana Motor Plaza is still operating their workshop.

Renault Adchini was pretty near to my place, and during my 2 visits to the dealership, it was clear that they were finding it extremely difficult to sustain their business. Another shocker for me is the closure of Grace Toyota! One of the best dealerships, the Saket branch was pretty near to my place, and I distinctly remember taking 2 test drives of Etios. They were extremely courteous and one of the best. Raj Hyundai......hardly a km away from my place and no wonder it shut down. There’s Maruti’s AAA Vehiclades just 3 plots away and while the AAA showroom is always buzzing, the Raj Hyundai showroom was always empty.

With so many dealerships having shut their shop (including the premium brands dealerships), the automotive industry is surely in a big crisis. Sad to see this as an automotive enthusiast. I hope and pray the industry gets back on track ASAP.
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Old 7th May 2019, 22:05   #79
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IMO we should be exercise patience with our anxiety regarding the auto sector which is going through a cyclical phase. Market just had a good Akshay Tritiya.

https://www.firstpost.com/india/aksh...85941.html/amp

Of course, impending BS6 & (unnecessary) negative outlook on diesel engines is adding fuel to fire. We must realise that information is not freely available & long term view is translucent to opaque as far I can see. For China driven industry is betting on big way on LI batteries (solid state batteries with longer range/ life/ durability), conveniently ignoring issues of finite raw material & issues with disposal of radioactive material.

Audi (like Toyota & Hyundai) is now drifting towards Hydrogen Fuel Cell technology which can be our best bet.

Coming back to dealer attrition/turnaround, many businesses are now also playing smart by associating with new auto companies, &/or simply hiving off lesser lucrative businesses as auto sector outlook seems uncertain in immediate future to them.

Quote:
Originally Posted by pf007 View Post
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. Totaling 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
Taxes have always been on higher side in case of this industry even when the size of market grew by 1.5 times. Please check historical data. In fact, due to GST tax rate has come down marginally. Then one can add up benefit of claiming input tax (plus taking out few hundred taxes) & the net outflow due to indirect tax (GST) is lower for businesses.

We need to understand 2 major issues, viz - these dealerships make money through after sales (than vehicle sales) & car owners do not want to pay more. Only those businesses survive which can make the two cross & thereafter maintain balance between the two.

I would say running a business is not an easy task, you are not just managing resources & humans but also trying to make good money from the business, than other avenues.

Last edited by aah78 : 7th May 2019 at 23:01. Reason: Posts merged. Some abbreviations expanded.
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Old 7th May 2019, 23:24   #80
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

High cost of new cars, student loans, migration to different cities based on work etc makes cars a liability for millennials.

With companies like Tesla pushing for direct sales approach, it is just a matter of time for electric cars with direct sales to take over the dealership approach throughout the world.

Oil burners needs routine maintenance and that made sense for dealership model to sustain. But with an electric with less than 10% of moving parts compared to a conventional Oil burner, need for robust dealerships will reduce. Just a service center within the locality will suffice.

We are moving towards an era where cars will become like mobile phones, TVs, washing machines etc where we will use it till it lasts and replace it. Routine maintenance/repairs will become ancient terms.

Last edited by AccordSport : 7th May 2019 at 23:25.
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Old 7th May 2019, 23:25   #81
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Excuse me if somebody has already mentioned this here, but one additional point to be noted is the increase in business of the used car market. New generation cars are more or less reliable except for a few bad samples.There are many, especially in the rural market, who would pick a 2-5 yr old Honda city than a new hatchback. The rise of professional companies in used market has also given people some confidence due to the "certified" badge.

Quoting my example, I was in love wit the duster and wanted to get a new AWD model. The finances were blocking me. I got hold of a one year old for less than two third the original price. 2 yrs and many thousands of kms later, its still running smooth without any major issues.

Last edited by nettooran : 7th May 2019 at 23:26.
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Old 8th May 2019, 00:35   #82
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

I think the general trend in middle class people has shifted towards keeping the cars for a longer period of time and save the money for other things which too are becoming expensive, and that is having a cascading effect.

Few Examples that I experienced:
- My senior colleagues who have kids about to go to school, I got to know that the fees are exorbitant, even for Junior KG. Many are suggesting me to save for it as much and as soon as possible.

- People want to travel abroad, so they save for it, not to mention how expensive airline tickets and accommodation is when you are going out with your family.

- Healthcare: Although most is covered by insurance by employers, people do end up paying a lot for their parent's healthcare as private hospitals are not cheap. So again, saving some money here is a priority.

- Lifestyle is metros and bigger cities is improving, so is the quality of services with increase in cost. Be it watching movies in multiplex, eating in good restaurants etc. I don't remember the last time I spent less than 1000 Rupees on a evening out with my family. Even liquor has become so expensive, that my old college friends prefer not to drink in a bar very often (dont even want to discuss the cost of a pack of cigarette)

These things cant be avoided as it has become a part of our lifestyle. So corners have to be cut somewhere. Couple that with points already discussed : Bad infrastructure, lack of parking space, car service/insurance costs etc. and you have a good reason for not upgrading to a bigger/newer car unless absolutely necessary.

Another point is the demographics: India is having the highest number of population below 30-35 years, at this age, most people are getting their priorities right: getting a house, completing higher education, getting a good job etc. (Wikipedia says that average age of Indian by 2020 will be 29 ) So I think demographics is going to play a major role in how cars will be sold in the next decade. Most young people are not interested in cars these days unless they need it for safety reasons, else they prefer to be driven around or have a reasonably expensive bike (Based on my experience with freshers joining my workplace, my relatives etc)
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Old 8th May 2019, 06:08   #83
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Despite shutting down of so many dealers due to various factors, now we have three bravehearts who will be entering our market in the hope they can stem the tide.

Let us see what the future holds for these companies.

Quote:
Overseas automakers have found India’s crowded market difficult to crack. Yet, three more are looking to sell bigger vehicles in a nation of car buyers obsessed with three things—small cars, mileage and pricing.

While Hyundai Motor Co.-owned Kia Motors is introducing a mid-sized SUV, code-named SP2i, the Chinese-owned British carmaker MG Motors is debuting with its SUV Hector. Peugeot’s parent Groupe PSA’s Citroen is expected to launch its SUV, the C5 Aircross, next year.
Source: Bloomberg Article 06 May 2019
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Old 8th May 2019, 15:38   #84
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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 pf007 View Post

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

.
A Dzire VXi cost me an equivalent of 20 lacs Indian Rupees in Nepal. Sri Lanka along with Nepal have the highest vehicular tax in the world.

Coming back to topic, though the dealers are shutting down in metropolitans, I've seen several opening up in smaller towns. Hope this shutdown is only temporary.
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Old 8th May 2019, 17:03   #85
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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 Abhejit View Post
It is noteworthy that despite having among the highest vehicle taxes in the world, India has such a massive demand for vehicles - shows the massive buying power that Indians possess, which will only grow in the future.
India is still at 13 cars to 1000 while USA is at 900:1000, even if we target China which is 52:1000, lot of scope.

I think a 4 wheeler still has a prestige point at rural India and that’s where the sale is so basically it’s not buying power but necessity.

The million dollar studies by the consultancies firms predicted much higher growth of this industry which is where the other urban factors plays role.
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Old 8th May 2019, 18:13   #86
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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 amitjha086 View Post
A Dzire VXi cost me an equivalent of 20 lacs Indian Rupees in Nepal. Sri Lanka along with Nepal have the highest vehicular tax in the world.

Coming back to topic, though the dealers are shutting down in metropolitans, I've seen several opening up in smaller towns. Hope this shutdown is only temporary.
Please consider Maruti does not have a plant at Nepal and Lanka.

Shut down is off course temporarily but hopefully the dynamics of this business will change to the benefit for all
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Old 8th May 2019, 18:19   #87
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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 GTO View Post
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!

2 more for that list


Libra Hyundai
Libra Autohaus BMW


Closed the dealership in Dec 2018 and scammed a lot of people while doing it (including me).
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Old 8th May 2019, 19:21   #88
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

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Closed the dealership in Dec 2018 and scammed a lot of people while doing it (including me).
You were not alone. Though Team-BHP bailed me out. Link.

Thank You Team-BHP .
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Old 9th May 2019, 07:45   #89
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Re: Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost

Vehicle dealers see inventory pileup as sales continue to dip, commercial vehicles with 16% on-year dip in registration numbers to 63,360 units in April.

Quote:
The worst hit were commercial vehicles with 16% on-year dip in registration numbers to 63,360 units in April. Registrations of passenger vehicles and two-wheelers were down 2% and 9% to 2.42 lakh units and 12.85 lakh units, respectively. Three-wheeler registrations fell 13% at 47,183 units
Quote:
With falling sales volumes, liquidity deficiency in the financial markets in the aftermath of the IL&FS crisis, and impending switch to BS-VI emission norms from April 2020, dealers are advocating for trimming inventory levels to 21 days

Link
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Old 9th May 2019, 10:00   #90
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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 GTO View Post
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!
Just like the National Capital, Things are gloomy in the business capital too

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Dealers failed in Mumbai and Pune:

Mithila Hyundai- Mira Road
Pramukh Hyundai-Prabhadevi
SK Automotive
Fiat,Prabhadevi
SK wheels-Maruti
Adaya-Audi,Porsche,Honda
R Square-Hyundai,Chembur
Gennext-Renault,Worli,Vashi
Spectra Motors-Maruti
Torrent-Nissan
Tornado-Volkswagon
Global Gallerie-Mahindra
Global Galleri-Hyundai
Global Gallerie-Volkswagon
Link way Honda-resigned
Kamala-Hyundai
Kamala-Nissan

PUNE:
Neil Hyundai
Pashankar-Audi &GM
Pandit- tata motors
Rajpal-Ford
Viraj-skoda
DSK-Toyota Pune
DSK -Toyota sangli
DSK-Toyota Satara
DSK-Toyota Ahmednagar-Bhujbal-Nissan
Oxford-Nissan
Pashankar-Skoda
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