[Iyencar]

Rajiv Bajaj has called it as he sees it. He rightly (imo) claims that the auto industry is suffering as a result of it's own mistakes. Link

-Indian auto products are mediocre compared to world-class products and that the sector needs to ask itself if it's done enough to become globally competitive.
-"when you will make scooters, and bikes and cars and jeeps and SUVs and trucks and buses and everything under the Sun, you are obviously not going to be world-class at anything"
-"In terms of motor-cycle, I was looking at these numbers yesterday, year on year, the decline in retail sales is only around 5-7 percent... if that can be called a crisis then what is it we mean by the normal up and down cycle of a business?"
-Bajaj said that the focus was on now ensuring that retail sales are as good as wholesales. "We will use the festive season to completely correct stock at the dealership level"

The Indian auto industry needs to get their heads out of the sand. In addition to the points made by Bajaj, there are several other factors too like lack of focus on safety (Suzuki), using the customers as testers for vehicles (M&M, Tata), fleecing the same old model to death (Renault), shady dealers (Skoda), overpriced cars (Toyota, Hyundai), reliability (VW), no effort to tweak to the Indian conditions (DSG failures from skoda, space savers or lack of spare tyres in almost all luxury models), not issuing recalls in the Indian market when they do so everywhere else (Ford Endy, erstwhile Civic Hybrid),etc. etc. That's from pretty much all the major manufacturers in the country. All they saw was an untapped market and tried to milk it for everything it was worth. No passion at all.Also quoting another great man, i.e. myself

Originally Posted by Iyencar

As someone who is flirting with getting a car home, I have no sympathy for these guys. A young middle class couple starting out in life and wanting to buy a new car would need a budget of atleast 7 lakhs. Buy a car less than this and you end up compromising with silly stuff like rear parcel trays, weak engines, no power windows, rear defoggers/wipers, fog lamps and heck even airbags, etc.

This attitude would have worked in the early days when buying a car was a status symbol and regular folks didn't know better. Now the average Indian has seen what the world gets and wants nothing less. If you can't give it they have many other ways of spending that money.

[Nithesh_M]

The average person has seen and wants world class products but can't afford to pay world class pricing. Therein lies the problem and that problem is the state of the economy.

[Superleggera]

Originally Posted by Nithesh_M

The average person has seen and wants world class products but can't afford to pay world class pricing. Therein lies the problem and that problem is the state of the economy.

What is the world class pricing? Cars in India are horribly overpriced when compared to other world class market, some of them as much as 3 times.

[Nithesh_M]

World class pricing depends on your definition of world class car.

Assuming a world class car is one that passes Euro Ncap impact tests for a global model, I'd say the difference in pricing between an Indian 0 star hero Chevy Beat and the USA spec 4 star Euro Ncap model could well define world class pricing.

But yeah if Chevy managed to sell the US spec Beat here for over 10 lakh rupees they would be laughed out of the country. A
If you look at the Kia/Hector threads you will see people complain that big sized cars like that starting from the same price as an entry level hatchback in the US are "overpriced" or "out of expected budget range".

Our purchasing power isn't as strong as the market we want to emulate. Manufacturers know this so they build products here to a price that's acceptable to the average car buyer.

[Rahul Bhalgat]

The reasons being pointed out by Mr. Rajiv Bajaj exist even when the Auto industry sold in good numbers. So these are not the reasons why the sale is down IMO.

A car or a house is a big ticket purchase for an average Indian middle class family. Given the state of economy, such purchases are on hold. This is because they can't hold the expenses on education or marriage etc.

The average middle class does not think before spending lakhs of rupees (quite a few lakhs) on the college fees / donation of his children without thinking about the education quality or the willingness / ability of the child to receive that education passionately.

Then comes marriage. We spend for lavish marriage parties, gold and what not. Less we speak of it, the better.

So, if the incomes are not growing, an Indian family curtails the expenses on cars / bikes and saves the money for marriage and college fees / donations (I won't say education).

After college fees / donations and marriage, comes the house (and it's EMI). The car therefore will be purchased only if there is enough disposable income. And that 'enough' disposable income does not come in unless you have skills and personal qualities (loyalty, integrity, professionalism, interpersonal skills, quest of being best or at least better etc.). Lakhs of rupees of fees / donations do not imbibe these qualities; these have to come from the parents. So those who were not brought up with such qualities or did not acquire these qualities will lag when it comes to spending for cars, especially when the economy is not bouyant. Unless they have old savings / investments / assets that generate some disposable income.

[dragracer567]

Originally Posted by Superleggera

What is the world class pricing? Cars in India are horribly overpriced when compared to other world class market, some of them as much as 3 times.

I would disagree. Cars in India tend to be priced the same or actually cheaper than cars sold in some other developing countries (Sri Lanka, Pakistan, Bangladesh, South America, Indonesia, Vietnam and even China).

Offcourse, luxury cars (CKDs) tend to be expensive in India but even then, they seem to be priced around the same as those in European markets such as Spain and the Netherlands (though they arguably get more safety features as standard).

Thing is, developing countries tend to receive much less in income tax, so they depend on such commodities for government revenues. Obviously, the relatively sub-standard quality of cars sold in India and the safety features they come with (or the lack thereof) also helps with the cost. Most premium cars that that assembled here like Mercedes and BMWs don't even come with a full set of airbags (i.e more than 8) like their global counterparts do, which seems to be the real problem with India - we just don't get good quality cars!

[contentedbloke]

Let us take the example of the ubiquitous Bajaj auto rickshaw - one of the most popular and highly used means of public transport in India. The basic design has been unchanged for more than 35 years. Even the seating (basically wooden board with a small foam and Rexine cover) for the driver has not changed. What innovation or comfort have they brought for the drivers or the passengers? And for this tin box, they charge almost 2 lakhs from a EWS section of buyers (I.e. autodrivers). And they talk about innovation and keeping head in the sand!!!

[VaidhiR]

Originally Posted by Superleggera

What is the world class pricing? Cars in India are horribly overpriced when compared to other world class market, some of them as much as 3 times.

Interesting take. Can you elaborate more on this?

[Superleggera]

Originally Posted by VaidhiR

Interesting take. Can you elaborate more on this?

By world class I was comparing to developed markets (US/AUS). Didn't compare the markets which are less developed than ours.

Honda Civic price in India = 1.5 Times than the US
Honda CRV Price In India = 1.8 Times than the US
Toyota Corolla Price in India = 1.5 Times than the US

When is comes to luxury brands like Lexus and BMW, its more than double in some cases.

A 2019 Civic with 2.0 L engine with a CVT is sold in US for 19,572, with additional discounts (true car)it comes to 18,650 which translates roughly to 13 Lakhs. In India CVT Civic is charged almost double with 1.8 L engine.

[iceman.]

If anyone has read the book American Icon(the Alan Mullaly Ford turnaround story), this seems eerily familiar to the pre recession crisis that the big 3 found themselves in 10 years ago.

[Sebring]

I think what's happened here is a shrinkage of a mere 5% to 7%, in annual terms, and the automakers are going to town with it. The lost jobs will never return. Let's examine the space. The market has shifted from hatch/sedan to SUV - but if we were to see the new launches - Hyundai came out with i10 NIOS and Altroz is waiting - so in 6 months if there isn't much traction (in sales) of these models and this reflects in sales percentages, can the automakers turn around and say that the market has gone sour? What are their forecasts? Where is innovation? They have forced the Govt to relax on most policy matters and the electric initiatives have lost some of the boost it received as a direct relation to that. Where are the cheap hybrids/electrics? The UAE doesn't make cars and there is a 5% flat tax, but it is still 40% cheaper than India (Only fully loaded top variants are sold). Someone (somewhere) is making pot loads of cash over here, by arm twisting the Government.

[Carma2017]

Rajiv Bajaj has oversimplified the crisis. It is a crisis and is a result of a perfect storm of regulations, business cycles and wishful thinking of Nitin Gadkari. The expectations of miniscule minority like us Team BHPians do not equate to what the majority of Indians want.

[K_Drive]

There is a reason Two wheeler and Three wheeler industry is least affected(5-7% decline as per Rajiv). These are the affordable mods of commutation for common/middle class people. At lest certain percentage of people who are in the fences for buying cars are stepping back and getting Two wheeler. This trend will continue till all the confusion in the auto industries clear and people have better spending power.

[fazayal]

Originally Posted by Superleggera

By world class I was comparing to developed markets (US/AUS). Didn't compare the markets which are less developed than ours.

A 2019 Civic with 2.0 L engine with a CVT is sold in US for 19,572, with additional discounts (true car)it comes to 18,650 which translates roughly to 13 Lakhs. In India CVT Civic is charged almost double with 1.8 L engine.

Have you checked the taxation levels on cars in both the countries?

Also there is economies of scale. The number of Civics US sells in a month would be much more than what sells in India in a year!

[Superleggera]

Taxation is a different game altogether , and I do agree to the volume . The number of corollas sold in US in a year is more than the total number of cars sold in India .what am saying is that we don't have access to world class pricing for various reasons and we will never be.