[avishar]

Looks like May might be worse.

Maruti Suzuki's poor run continues in May: 121,018 units, down 25%

From the looks of it, FY2020, or the first half at least, is going to be a very tough one for the Indian passenger vehicle industry. Market leader Maruti Suzuki, which opened FY2020 with sales of 131,385 units (-19.6%) in April 2019, has seen slower sales in May 2019. At an overall 121,018 units despatched, its sales last month are down a substantial 25 percent year on year (May 2018: 161,497).

If the UVs were the sole sub-segment in April 2019 to be in positive territory, then they too have entered negative zone in May 2019, which means all of Maruti's sub-segments' sales are in the red in May 2019 (see detailed sales table below)

May 2019 sales performance
The entry level passenger car duo of the Alto and old Wagon R hatchbacks sold a total of 16,394 units, down 56.7 percent year on year (May 2018: 37,864). The seven-model compact car lot (new Wagon R, Swift, Celerio, Ignis, Baleno, Dzire, Dzire Tour S) accounted for 70,135 units, down 9.2 percent (May 2018: 77,263).

The premium Ciaz sedan saw its sales decline by 10.7 percent to 3,592 units (May 2018: 4,024). Now, equipped with a new 1.5-litre diesel engine, the Ciaz could see some much-needed traction. The rate of sales decline in May is slower than it was in April 2019.

The quartet of utility vehicles (Gypsy, Ertiga, S-Cross and Vitara Brezza) has also seen de-growth with despatches of 19,152 units, down 25.3 percent (May 2018: 25,629).

The van duo, Omni and Eeco, were down in May 2019 with 11,745 units, which marks a de-growth of 29.7 percent (May 2018: 16,717).

Do the math and overall domestic PV sales for Maruti Suzuki last month totalled 121,018, about 10,000 units less than in April 2019m and down a substantial 25.1 percent over a year-ago numbers (May 2018: 161,497).

The company, which is targeting combined sales of 2 million PVs in the year FY2020, was about 137,551 units short of that milestone in FY2019. It will have to recharge itself with an aggressive model and sales strategy if that 2020 goal is to be achieved. From the looks of it, that 2020 vision seems far away.

If there is a positive, then it is in the Super Carry small commercial vehicle's numbers. At 2,232 units in May 2019, it has recorded 31 percent YoY growth, albeit on a low base.

All said and done, Maruti's performance is not good news for the industry. The bellwether of the PV industry, which recently announced its decision to dive out of diesel, is experiencing a slowdown like never before.

[NaXal]

Two years ago a new dealership came up in Kolkata for Ford, Saini Ford. I was one of their first customer, even before their name reflected on Ford Website.

Their service centre was really awesome & truly reflected the Ford's dirt cheap maintenance promise.

Yesterday while on my visit to get seat covers installed on my car, I learnt that they are shutting down.

Their official response?

Kolkata is too small to sustain 3 Ford Dealerships. Older two will continue to operate.

The Saini Group has other dealership outlets for Toyota/Hyundai & such. They are reassigning the Ford specific staff to those options & they plan to reuse the present Ford related property for upcoming Kia Motors dealership.

[CoolFire]

Seems the sales pain for industry is not going away soon. May month sales of Maruti down 22% yoy Other numbers trickling in mostly bad too.

https://auto.economictimes.indiatime...n-may/69609066

[B103]

Originally Posted by NiInJa

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.

I concur. In this system, people who pay taxes are the ones made to pay more taxes. A big lump sum amount is collected upfront as road tax but condition of city roads remain pathetic. If there is a descent highway to drive, there are tolls everywhere on it. My personal view is that this is is nothing but loot. Further, with no space to drive or park in cities, car ownership is becoming a botheration than a convenience. Cost of maintenance and insurance is also on the rise.

No wonder, people who can afford to buy or upgrade are holding back. House/cars etc are available on rent as per usage. Why own and lock the capital in depreciating assets is the thinking of new generation. I have multiple colleagues who prefer to stay in a rented house. They will hire a self driving car when going out of station long drives. Works out a lot, lot cheaper and no ownership headaches as well.

[avishar]

More bad news.

Tata Motors domestic sales drop 26 pc to 40,155 units in May

New Delhi: Tata MotorsNSE -1.46 % Saturday reported 26 per cent decline in domestic sales to 40,155 units in May. The company had sold 54,290 units during the same month last year, Tata Motors said in a statement.

"Tata Motors commercial and passenger vehicles business sales in the domestic market in May 2019 at 40,155 units witnessed a drop of 26 per cent, as against 54,290 units sold in May 2018, as market sentiments cont ..

[etrast75]

Originally Posted by B103

No wonder, people who can afford to buy or upgrade are holding back.

I think this is a major reason. I was looking to upgrade my jetta or my wife's ritz but just could not pull the plug. There was just no value in buying a new car when your existing car is running fine. Wanted to buy a decent SUV but everything was north of 30 lakhs and I just could not justify paying that much money for something I use an hour a day at the most. I tried convincing my wife to shift to an automatic hatchback and she says she is happy with her current car. So not planning to buy any new car for another 2 years. Taxes just make it impossible to find any value in new cars nowadays. 28% GST and 18% Road tax.. Imagine almost 40% of the on road price being taxes. For big cars, the GST is as much as 50%..
I am on-board with high taxes if we get roads commensurate with the taxes we pay.. We all know the pathetic condition of our roads. I believe the govt is basically killing the car industry slowly with the high taxes.

My previous post made me think of breaking down some number to find out exactly how much of the on road price is tax for a hatchback under 4m with engine less than 1200cc in bangalore

GST rate is 29%
Ex-showroom price for Honda Jazz VX CVT petrol - 914900

Ex-factory Price = 709,225
GST @ 29% = 205,675
Road Tax (bangalore) = 142,175 (from carwale.com)

on road price: 1,057,075
Total tax Paid : 205,675+142,175 = 347,850
% of tax to ex-factory price = 49%

This is for cars with lowest GST rate and the second lowest road tax.

I will do one more calculation for something like a Hyundai Creta later.. I bet the tax component will be close to 60%.. Why give more money to the govt voluntarily when we get nothing in return?

More examples (slow sunday morning I guess)

[.sushilkumar]

Originally Posted by etrast75

GST rate is 29%
Ex-showroom price for Honda Jazz VX CVT petrol - 914900

Ex-factory Price = 709,225
GST @ 29% = 205,675
Road Tax (bangalore) = 142,175 (from carwale.com)

on road price: 1,057,075
Total tax Paid : 205,675+142,175 = 347,850
% of tax to ex-factory price = 49%

i believe the Ex- factory price do have some tax component as well. Specially the tax on Raw material. OEM do pay tax on buying raw material which ultimately gets passed on to end user and included in Ex factory price.

is it possible that they claim input credit for the raw material and not pass on benefit to end user.

[Sebring]

Concorde has shut the ORR service outlet. Mr Arun, the chief, was awesome there. the only hitch was that it was located too far inside and was easily missed from the main road. Now there is no option but KHT

[Acharya]

In addition to high taxes & high cost of cars, there is another factor which is contributing to this slow down - Ola & Uber partners have almost stopped adding new cars in big cities. Metros are choking with traffic beyond any hope for change, earnings have come down for online cab owners & demand for cabs is plateauing.
At one point online cabs were major chunk of monthly sales, dont think end user sales could ever fill this gap.

[SilentEngine]

Here are my views on this:

In tier 1 cities (speaking from my experience in Bangalore), people who would otherwise have bought their first/second/third car are not buying because of various reasons:
- Lack of residential parking space. In Bangalore, if you go to any traditional residential layout, it's very common to see houses built 2-3 decades back without adequate parking space, and most park their vehicles on the road. In many apartments getting additional parking spots is a very difficult proposition, unless this was factored in at the time of construction.
- Lack of public parking space in cities. Outside of shopping malls, parking infrastructure is seriously lacking in our cities. Lot of commercial buildings simply don't have parking space. Long term solution for this would be to have dedicated MLCP infrastructure to free up public roads.
- Cabs/Rental options - Earlier lot of people bought cars because of lack of options otherwise. Now, Uber/Zoomcar etc have changed the behavior and younger generation finds it easier to hire a cab or a rental car for immediate need than buy a car and maintain it long term.
- In general, the 'value' quotient of a car has come down over the years. Higher taxes may be a contributing factor but not the primary cause. Imagine government deciding to reduce the GST/Road taxes. If it indeed reduces the on-road costs and increases sales, it will only worsen the situation and congest our cities even more without any improvement in our urban infrastructure. Someone who really wants to buy a car would buy whatever fits in their budget. They are not going to look at GST or Road tax to make the decision.

Just the falling sales numbers don't give the complete picture. Let's take Maruti Suzuki as an example. If Alto's sales fell 56% y-o-y, that only means car buying public don't find value in Alto as they did earlier. If you look at Maruti Suzuki's balance sheet you will notice that it's only made more profits year after year for last few years till FY 2018. It has a dominant market position but look at the products we get in return. Fact that it continues to sell cars like Alto/Omni/WagonR based on decades-old platforms should be the real worry for us. It's exactly this reason that other smaller players find it difficult to operate in our country.

If we want any government action, they should be:
- Ensuring there's fair and healthy competition
- Stricter safety/pollution norms

If government should provide any incentive, it should be to Improve public infrastructure.

[B103]

Originally Posted by etrast75

I will do one more calculation for something like a Hyundai Creta later.. I bet the tax component will be close to 60%.. Why give more money to the govt voluntarily when we get nothing in return?

Really appreciate your effort. Good investigation. The numbers tell it all.

The middle class is paying income tax, property tax, lump sum registration amounts for property, vehicles etc and SGST/CGST on a slew of items/services, Name an item and there will be innovative tax component attached to it. There is even a surcharge on tax. Paying toll charges after all these does not seem to be justifiable in any way.

Tax department is on the way bringing out a new data mining software using expert analytics which is intended to unearth tax evasions. I sincerely wish that Government also spend 1/10th of this enthusiasm and effort to improve its services back to the citizens. A Government office is still a dreaded place to walk in even when GST collections are exceeding 1 lac crore, month after month.

People would be happy and comply with paying taxes voluntarily (not via coercion as it is now) if the tax payer also feels that it is not a zero sum game for them and they are in it for "nothing".

Any thoughts/views/opinions?

[SchumiFan]

Not sure why suddenly people are complaining about GST and taxes. 2017 was the year GST was introduced. And the growth was still going good YoY. IIRC the tax rates were even reduced for a lot of category of cars.

It's still the same rates as before this year and it certainly can't be a reason why people have stopped buying cars. And if rumours are right, there's a whole lot of discounts on offer now than before bringing the price down greatly.

For all the hue and cry about taxes, a very low number of people pay income tax in our country and it is good that GST is bringing more people under its umbrella.

The country might need a stimulus and a good monsoon might help. I'll hope for one.

[B103]

Originally Posted by SchumiFan

Not sure why suddenly people are complaining about GST and taxes. 2017 was the year GST was introduced. And the growth was still going good YoY. IIRC the tax rates were even reduced for a lot of category of cars.

It's still the same rates as before this year and it certainly can't be a reason why people have stopped buying cars. And if rumours are right, there's a whole lot of discounts on offer now than before bringing the price down greatly.

For all the hue and cry about taxes, a very low number of people pay income tax in our country and it is good that GST is bringing more people under its umbrella.

There is ample scientific evidence available that, when the going gets tough like in the period of a recession it is those items in the discretionary list that gets pruned the most. Purchase of new vehicles, houses, air travel, vacations, etc fall in this category. Until now, the going was good but there are macroeconomic factors at odds now. People have covered it above and so I am not going into it.

GST has been a good proposition for the country as a whole. No debates there. What I wished above is for a sensible tax system that ploughs some amount of resources back in such a way that incentivizes and encourages more people to pay voluntarily. Tax payers should also be (reasonably) happy about paying taxes.

Is there a tangible reason for such motivation in the current system? Of course, desh bhakti is laudable but it is an an abstract notion and hence I am not scoping it in as a tangible entity.

[volkman10]

Passenger Vehicle sales continue to slump for 7th straight month.

Nissan India Posts Big Decline In Sales, Dip By 47% in May 2019.

Mahindra and Hyundai decline in single digit while the rest of them post massive decline. Tata Motors post ~ 38% decline.

Companies hope the growth will begin as the new government is in place.





Source:ET

[blacksport]

All cars, even Marutis are currently overpriced. Maybe due to taxes, or maybe due to rising input costs. You can't have a decent car for less than 10L, and the moment you talk about good cars, everything is north of 20L. It does not make sense to spend half your salary as EMI to buy a decent car.

Personally speaking, my purchasing power hasn't increased one bit during the last 10 years. My salary increments are failing to beat inflation, and the story is similar with most IT folks. It is the IT folks who had been buying new cars in droves fueling the growth in the automotive sector. Now that IT has slowed down it is inevitable that it will lead the automotive slowdown too. To add salt to the wound, businesses have been under-performing since demonetization and GST, so this sudden deceleration in spending wasn't unexpected. GDP is down even though they have tweaked the numbers to paint you a rosy picture.

I wouldn't be worried though. We need a reality check to understand where we stand as a nation. So let things slow down, let some businesses go bust, let prices come down, let people start consuming lesser than they can afford, let people take a reality check.