[cool_dube]

Completely agree with folks here on the VFM proposition of a good pre-owned car! I have always been an ardent proponent of picking up pre-owned cars - in fact, 7 of the 11 cars I have owned so far in my driving life have been pre-owned and every one of them have been an absolute delight to own, especially at the price point I got them

Of all the reasons cited for this slowdown, one of the primary is the atrocious pricing - car buyers have finally figured out that they are being taken for a ride in the name of buying a new ride Hope this slump brings about some price rationalization in the market!

[ajmat]

Today's Mint is covering the slowdown in a series of articles. Today's article here

• Around 40,000-50,000 workers in the Gurugram-Manesar auto belt have been retrenched
• The downtrend has trickled down to the logistics sector as lower vehicle production has drastically hit the utilization of trucks

Some Numbers

Almost 40,000-50,000 workers have been retrenched at Gurugram and Manesar in Haryana, the country’s biggest automotive hub,

Maruti’s base of more than 300 tier I vendors have laid off 100-150 people on an average. Prominent vendors, who have multiple facilities such as Lumax Technologies and JBM group, have laid off around 500 or more employees.

HMSI, India’s largest scooter maker, has asked 1,200-1,400 of its level I or technical contract workers to proceed on leave, while a third of the total contractual workforce with the vendors has been made redundant as daily production has been reduced to 3,500 vehicles from 5,500 vehicles.

Some Contributory Causes

Sales of commercial vehicles and two-wheelers have also been hit. A series of factors including higher insurance costs, volatile stock markets and a liquidity squeeze in a slowing economy have slammed demand for new vehicles.

The downtrend has also trickled down to the logistics sector as lower vehicle production has drastically hit the utilization of trucks, leading to an increase in non-performing loans in the sector.

Post October, job losses are expected to rise even more as introduction of Bharat Stage VI norms would lead to a slowdown for a couple of quarters."

[wheelguy]

Indian arm of German auto component major is undertaking production shutdown ​ at its Gangaikondan plant in Tamil Nadu and Nashik plant in Maharashtra.

Amid a weaker sales outlook, auto component maker Bosch on Wednesday announced that the company will halt production at its two plants collectively for 13 days in the month of August.

"With a view to adjust production to meet the demand for products and to avoid unnecessary buildup of inventory, it is proposed to suspend all manufacturing operations at the Company's plants" Bosch said in a regulatory filing.

Prior to this, the company had suspended all manufacturing operations at its plant at Bidadi for three days from August 1-3.

Link

[Romins]

There is an action from the manufacturers and acknowledgement from the government.

Reuters news

"The auto sector, which contributes more than 7% of India’s GDP, is facing one of its worst downturns. Passenger vehicle sales have dropped for nine straight months through July, with some automakers suffering year-on-year declines of more than 30% in recent months. "

"The auto executives urged the government to cut taxes on cars and auto components to 18% from 28% and sought help to prod banks to lower lending rates and make the loan terms more lenient, one of the sources said. "

[anjan_c2007]

Let us hope the government takes some tangible steps to restore confidence in the automobile sector and its retail trade. The Finance Minister held meetings with CEO's and representatives from the SIAM yesterday, who suggested bringing down the GST, make the auto dealers more eligible for easier loans from financial institutions, many of whom are presently labelling auto dealers as defaulters, allow the BS IV compliant motor vehicles in the inventory to be sold even after 1.04.2020, a favorable scrapping policy for older cars and so on.

The German government provided a tax incentive of upto 2000 Euros during the global meltdown, a decade ago to car owners who scrapped their older cars to go for newer ones. We will hesitate to introduce such an incentive, as the government will be immediately labelled elitist and doing things favourable for the car owning class.

The SIAM also taked about a stimulus package for the automobile industry. It may be recalled that the Big Three in the US had got a similar stimulus package from the US government during the global economic meltdown of 2008-09. The package was of US $ 80.7 billion, lasting from December 2008 till December 2014. The Big Three are the lifeline of the US economy and Americans have nationalistic sentiments, when it comes to the auto industry and it's financial health. A joke that received headlines was that a CEO had come to Washington to discuss the stimulus package in the company's private jet. He was ridiculed.

Whereas, our rulers still mete out unfair treatments to the auto industry, like during the socialist era, when these were considered luxury items for application of taxes and axes. We have come a long way ever since. Our auto industry has become a lifeline of our economy and contributes 7 % to our GDP. We can ill afford to ignore and remain hidebound to it's sensivities.

Another good news percolating today is that the FPI surcharge levied in the Union budget 2019-20 is to be withdrawn. This is becoming a feel-good factor and can stimulate the economy:

https://www.btvi.in/videos/govt-may-...urcharge/36214

[SpideyBoy]

Tata Motors announces block closure at Pune

- Tata Motors has announced a three-day block closure at its Pimpri Chinchwad (Pune) plant

A Tata Motors spokesperson told BusinessLine: “The external environment remains challenging, leading to demand contraction. We have aligned our production to actual demand and adjusted the number of shifts and contractual manpower.”

Company sources said this was not a complete shutdown, but block closure where some blocks will stop operations for three days while others will continue to operate. The company sources refused to share the number of workers affected because of block closure.

“Our Pune plant produces commercial and passenger vehicles. Only a few blocks are going to be shut while the rest will be operating. This is because of slowdown and managing demand and supply. This is common in OEM companies,” said the company source

The company has communicated to employees that it will shut operations in some blocks from August 8 to August 10 for “maintenance” and also because of “low production”. The company would shoulder 50 per cent cost during the closure while the remaining 50 per cent will be adjusted against the leaves of employees.

Source

[discoverwild]

Aren't we forgetting Government greed and apathy in all this?

1. For the past 5 years, the cost of fuel has been kept high by way of increasing taxes when international crude has been at its lowest. Today, daily variations in prices have made us lose track of how much we pay for fuel.

2. Focus on large outlandish projects, while city infrastructure is always in shambles. No city can claim to have a robust infrastructure in terms of good roads, drains and parking spaces. The cost of maintenance of cars have significantly increased owing to broken roads and heavy traffic. One spell of rain in any city and the cars need to turn to boats to navigate around.

3. GST and cess contribute a significant percentage to the cost of the car. Today, cars are no more a luxury. And car-buying public are not just the elite. For a middle class guy, these costs add a significant burden on him.

4. Insurance costs have been on a steady rise. I paid a third party insurance of 25xx, 34xx, 46xx over the last three years. This year, I will be paying even more while the value of my car keeps decreasing.

5. The recent changes proposed to increase registration charges from 1500 to 5000 for the first ten years and then renewal at 10,000 is just plain greed.

I have just pointed out the Government's hand in this mess since we have already spoken about the manufacturers and ever increasing prices.

[marutifan]

Some consumers who are looking to upgrade are also opting to wait and watch. For example, We've decided to wait for the anticipated reduction in GST or at least for a price cut before buying a new car.

The car that I currently own was bought through a lease offered by the company I used to work for. I was lucky in that I completed the lease and bought the car before GST came in and made the hire purchase option impractical. In fact I would have expected this slowdown at least 6-8 months earlier.

[pannags]

There are multiple reasons contributing to the great slump:

1. The auto sector saw a overwhelming growth over the last decade and is now at the end of it's hype cycle, settling down to more realistic growth numbers. I simply don't believe that a 30% y-o-y grown is anymore sustainable.

2. The impending BS VI norms have almost put a halt on purchase plans of many prospective buyers. While more and more cars will be offered with compliant engines before the mandated timeline, the options are currently limited.

3. A section of car makers have been hesitant to bring successful models to Indian shores because of the price sensitive nature of markets. This is another reasons for deferral of purchases.

4. App based self drive rental and ride sharing models are fast gaining popularity. While this may not completely deter people from buying new cars, there is definitely a dent.

[locusjag]

This evening, a carpooling friend asked me, the auto enthusiast, what car he can upgrade to.

He narrated his requirements and his budget. I fell silent for a while as I drove us home. I told him to simply buy a used Tata Manza, based on what he had told me. He said that's what he already owns. So I told him to stick to it till its wheels fall off. What can you find in a modern sedan that a Manza doesn't have? In fact there's so much that the Manza has which many modern sedans don't. And I don't consider bells and whistles such as Android Auto as actual features. Nor am I so sure that NCAP crash ratings can be taken too seriously in a country where 80% heavy vehicles don't have underrun protection bars (we are guaranteed to plug ourselves in our cars beneath heavy vehicles, if we drive fast on our highways)...and so I told him that most of our cars aren't worth the money we would need to splurge on them. He thought about it deeply and seemed to agree with me.

Long story short - I've (probably) deprived the automotive industry of one potential customer.

[anjan_c2007]

The interview of our Prime Minister published in Economic Times of today, however boosts up the confidence as far as the automobile sector is concerned. He has stated that demand and the industry will bounce back strongly soon and that EV's and ICE's can co-exist, co-create and learn from each other.

Economic Times of 12/08/2019 excerpts:-

Q. Sectors such as automobiles, real estate and mining are experiencing slowdown. Are specific measures in the works to turn around the situation?

A. Demand in these sectors will revive with the acceleration of economic growth in the coming period. A continued focus on ease of doing business, availability of lower cost credit, stability in policy environment are key to sustaining long-term demand in these industries.

On automobiles, the finance ministry has had a constructive dialogue with the industry. The slowdown is transient, accentuated by credit constraints, some regulatory changes and passiveness in demand. I believe that both demand and the industry will bounce back strongly and soon. I would like to assure everyone that India has a large enough market and big enough policy space to ensure growth of internal combustion engine (ICE) based automobiles as well as electric vehicles (EVs). There is no nee ..

We can only hope that the government walks the talk !

[volkman10]

Maruti Suzuki Chairman RC Bhargava's view on the slowdown, Electric vehicles, CNG, Hybrids and more:

- Maruti is reviewing larger BS6 diesel engines ( time-frame not committed)

https://www.youtube.com/watch?v=f9lCBY6ko08

[aerohit]

Different people have different reasons for not buying or upgrading car. Here are my reasons-


1) Poor road conditions, dust, rubble, flooding, pot holes everywhere
2) Too much traffic, in both good or bad roads
3) Driving is not fun anymore, it is dangerous and stressful in India
4) No parking space



Who should I spend money on a new car knowing that it wont last long due to above points.

[sumeethaldankar]

I am not able to understand this slowdown thing.

1. Venue has got over 50000 bookings (Hyundai Venue : Official Preview. EDIT: Launched @ 6.5 lakhs)
2. The recently launched MG Hector an unknown brand has stopped its bookings due to over-demand. (MG India's first SUV named Hector. Edit: Launched @ 12.18L)
3. The Kia Seltos another unknown unfamiliar company in India has got 23000 bookings.

That is around 100k vehicles almost sold among 3 brands 2 of which of them are very new to the Indian market. It is the older models which are feeling the pinch. I think they need to simply up their game and launch new products. The way I see the demand is still there for the newer generation vehicles while the older ones are which are facing the heat.

[am1m]

Will this slowdown also have a cascading effect on the service side of things?

Even when things were rosy and the industry was seeing insane growth year after year, the service quality was always a hit-or-miss. Now that car brands are seeing decreased profits and layoffs, will service become even worse?

Or will they just up rates to try and recover some money through this part of the business?