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-   -   Auto industry wants govt. to slash GST rate to 18% (https://www.team-bhp.com/forum/indian-car-scene/211939-auto-industry-wants-govt-slash-gst-rate-18-a-6.html)

What I meant was we need better infra in place. People have begun to see the futility of owning a 10 lakh vehicle only to spend hours in jams, money on fuel bills and costly maintenance.

Urban hell is a reality in cities like Delhi and what people are really looking for is a less stressful and more fulfilling/enjoyable daily existence. Spending your hard earned money on a over priced car which delivers so little when measured from this perspective is what is the real problem. A person with a 5 year old car is happy not spending on a shiny new tin box if he would rather have security of money in bank (less debt/emi stress) and spend part of that money on things like vacations/travel other leisure activities.

I mean did everyone really think that we could continue producing and selling tons of cars without improving the living conditions in the cities? I sometimes find this very strange when people are unable to see where they are heading.

To give you one example: tons on people head out on the weekends. Places like CP/saket in delhi ncr are teaming with folks looking to meet friends, drink, eat and hang out. Do i really want to take my car, struggle with parking, pay for the fuel and waste time parking when i can hop on the metro or take a cab AND maximise my fun time? Hell no! After few drinks, I am happy lazing in the back seat of a uber and getting dropped right back for 200 odd bucks.

Comprende?

This is exactly the future of car ownership. In the sense that there wont be any ownership. Development of disruptive trends in the automotive sector are slowly gathering pace. Short term and long term leasing are already being offered in the large scale.

- You own a car for 2-3 years.
- All maintanence is taken care of.
- You pay a monthly/yearly fee.
- You drive 20k to 25k per year.
- Fuel costs and Toll costs (if any) are on you.
- After 2-3 years, you have an option of extending this for a cheaper fee. Or get a new car (or a better car) for a similar price.

This is the classical leasing model.

But what car owners fail to realise is that the depreciation on the car is far too much to consider it an investment. An investment, by its classic definition, is when the price the customer pays for, sees some positive growth and offers to the customer some ROI. Real estate is an investment. A restaurant could be an investment. A car is not. Never was. Is not.

But the future of a car ownership will begin to look a lot like the leasing model. Except that you wont be the owner. Or if you are the owner, you will be leasing out your car to make you some greens. This is where disruptive trends like autonomous driving and electro mobility come into play.

Imagine you are an executive having breakfast by your kitchen counter. You open an app and order yourself a car. In 10 minutes, the car is at your doorstep, in time for you to slip into your shoes, pack your briefcase and head out. You get businesses done in the car. You attend telephone calls in the car. But there is no driver. You get out of the car at your office complex and head in.

Imagine you are on a vacation. Now, your car is parked in the basement car park. While, you are enjoying the beach, the "investment" stands idle in the basement. The money that you worked so hard for, stands idle. What would happen if your car could earn money for you?

If its your car, the car will make itself available for pickup. And will be making money as you work. Or you are on vacation? Until you (or anyone in your family) orders the car for pickup to run any errands. If its not your car, you lease it out during the time it stands idle. You earn money per hire, per km, per minute whatever. But you lease it out. So, what was never an "investment" until now, will become an "investment" and you dont have to even be driving it.

Über is exactly in this position now. Except that there is a driver and you dont own the car. The driver probably owns the car. But, in all probability, the owner leases the car out to drivers that make him money while he is vacationing in the Bahamas or punches out some numbers in his Apple Macbook super pro+ gold edition 17 inch custom laptop. (In a parallel universe, it probably exists!!)

Having said this, this shift in car ownership will take decades. Because for a overwhelming majority, a car is an emotional bond. People who work, spend about 4 hours a day in it. They spend the weekend with their family. A lot of memories are made in it. It takes us through time, distance and experiences that, no one can put a sticker price on. So we wont mind the depreciation because for people like us, losing a few rupees or euros is far less important than the memories that are to be made with it.

Package to boost auto sector rolled out, liquidity situation; scrappage policy to come soon.

-the proposed hike in registration of vehicle has been postponed till June 2020.

-to release the pending GST within 30 days

-a vehicle scrappage policy will be coming soon

- both electric vehicles and internal combustion engine vehicles will continue to be registered.

Link

Is the increase of depreciation from 15% to 30% until Mar 2020 to help increase corporate bookings? Or does it help individual buyers as well?
Also, looks like folks planning to buy a car next year would see a considerable hike in price starting Apr 2020. First the BS6 rates that is starting Apr 2020 and now the new date for hike in registration charges from May 2020.

The FM has had a dose of reality and appears to have stepped down from her high handed tone during the Budget.

I bet she just belted out what some Income Tax babu told her. She has now had the time to make her own readings of the tea leaves.

Very often, people in jobs (esp babu types) dont seem to realise how hard it is for businessmen/ employers to create jobs. They are regularly demonised and viewed with suspicion.

That said, by mid next year when the international downturn kicks in, I dont see the Govt being in any position to raise tax on Vehicles. Customer confidence may well be lower than it currently is.

Instead of reviving the industry with the GST cut, it would be far better to improve the liquidity and reduce the interest rates. To top it off, there is no guarantee that the manufacturers will pass on the full benefit to the customer anyways with the reasons such as "increase in input costs". The manufacturer will make hay at the customer's and exchequer's cost.

That's the problem. Even if govt reduce the interest rates, there is no guarantee that Bankers will pass on the benefit to end user with existing loans. Home loans being the case study. Interest rates from RBI are rock bottom but banks never pass on rates to existing end user since they all are being disbursed via their NBFC subsidaries, who refuse to bench mark properly.

Problem is not the availability of sufficient govt incentives, it's the middle men who have profitted from govt initiatives always due to lack of enforcement.

agree:
The FM mentioned she'll be meeting with GST council on Sunday, with 2 additional pressers in coming weeks. So I feel GST reduction is on the cards. Have been debating the same with my dad for the past one week, that say if there's a chance of a customer getting 1 lakh + benefit, he'll probably be given a mere 20-30k relief.

Banks have agreed to pass on the interest rate reductions.

https://www.indiatoday.in/india/stor...885-2019-08-23

https://economictimes.indiatimes.com...w/70803647.cms


A 10 per cent cut in GST for auto sector (to 18 per cent from 28 per cent) will reduce customer prices by 6-8 per cent, BofA-ML said. It will have 0.15 per cent impact on GDP.

Auto sector’s problem is self created, and they are squarely themselves to blame for their plight. They have literally doubled the car prices over the past 7-8 years, when crude, plastic, rubber and metal prices have stayed stable or have even shown reducing trends. Increasing input costs argument is completely bogus. Now they say sales as falling and want tax breaks.

Even if GST is reduced to 18% and this 10% reduction will reduce car prices by a partly 6%, who is to say they won’t jack up this 6% in 2 or 3 instalments, like they have so easily been doing for so many years now?

Car companies have become a cartel, and need to be dealt with accordingly. Their problem is in their products and the silly amounts they want to charge for them. A massive correction was overdue and perhaps we are seeing the beginning of it. These are market forces at play here, and the govt should not succumb to pressure and just let them take their course.

Novice question: Can someone explain what this `additional 15% depreciation' means!please:

This is mainly for corporate buyers. Let us say you own a company that has an income of Rs. 2 crores and expenses of Rs. 1 crore. Your profit is Rs. 1 crore and you have to pay corporate tax on this at the end of the financial year - next March. The corporate tax rate is 25%, so you have to pay Rs. 25 lakhs as tax to government.

Now let us say you buy a BMW car in the company's name this month for Rs. 50 lakhs. Now the government is allowing 30% depreciation, this means you can charge 30% of the cost of the vehicle (depreciation) as a business expense this year. Now your expenses become 1.3 crores and your profit becomes Rs. 70 lakhs. You then pay tax (at 25% rate for Rs. 70 lakhs) - this is now only Rs. 17.5 lakhs.

So you have now saved on your tax by Rs. 7.5 lakhs as compared to before! Effectively the BMW cost you Rs. 42.6 lakhs not Rs. 50 Lakhs. Next few years, you can again continue to take more depreciation at 15% each year and lower your tax outgo. These are the benefits of owning companies that most of us salaried blokes don't get.

I have been having the same discussions with my dad as well. Currently the FM has merely clarified their intentions and provided some relief to the corporate buyers. I don't think any of this will change the sentiment. For that, there needs to be a drastic reduction in GST with clarity on when the tax rate will be reintroduced to current status. This will make buyers want to take advantage of the situation and make up their minds on the purchase plans. Frankly speaking with the FM saying they will get back to us in this week makes things worse. Now even those who intended to book may hold back to know what's happening.

I agree with the member who said in one of the threads that GST is not the issue. The pricing of cars has been increased much more than can be accounted for inflation. Whole segments have gone up level in terms of pricing past few years. Like Ravi Bajaj said the slowdown is their own making.

I totally concur this. I returned back from US just a month back and had intended to buy a car for myself for office commute etc. I knew that it won't be easy to drive and traffic problems exist. So when I started my commute in company bus and realized it takes average 1.5 Hour to 2 Hours+ for a distance of 30 Kms, I chucked the idea of car. Rather than spending that time and fuel in my car with me needing to concentrate on road entire time, I would take company bus and watch downloaded TV shows on my tablet while I commute. On weekends, for short visits here and there, I would rather take auto which is plenty available or ola / uber. And now we have metro being constructed very near to my home.
Btw I am from Mumbai.