[fazayal]

Originally Posted by libranof1987

A little surprised that India being a rare RHD market in the world hasn't been mentioned as a reason.

Yes, India (along with developed nations such as the UK, Aus, NZ) has always been RHD but when was the last time there were two major developments relatively close to each other: diesel gate, which has had a global fallout in engine down-sizing + focus on petrol, and EVs becoming mainstream. But not only is India RHD, it is also very price sensitive.

Due to this, the cost of development specifically for the Indian market may not make financial sense for most manufacturers. All this only gets worse with India's taxation + Govt. policies along with our fascination for FE.

Indonesia and Japan are two more major RHD markets.

[saikarthik]

Voted for Our Government's ever changing policies / weird rules.

Originally Posted by Hayek

Why should a global auto major focus on India?

Consistency of Policy - You set up a CKD assembly line but suddenly find that you need to assemble not just cars but also engines and transmissions to be viable. You invest in Diesel engines because of an ever increasing price gap between petrol and diesel, and that gap collapses - and the biggest market by far says diesel cars must be scrapped in 10 years. You identify hybrids as a perfect interim solution for urban India - and taxes on hybrids sky rocket. Suddenly you find that your customers can’t get replacement tyres because some politician or bureaucrat decides that tyre imports should be banned.

Even taxation comes under the policy IMHO. As you pointed out, It has been a chaos in the introduction of policy and implementing it. Though the intention was good (sometimes), lack of clarity in policy roadmap, technicalities and hidden agenda add to the misery.

They had given a lot of leeway to their corporate friends, tolls and infra developers but none to automakers even when they raised a proper concern and pitched few reasonable solution for a issue.

Example: Automakers had to implement tags with additional cost to the cars on time (well postponed just couple of months), but toll plazas can take 2 years to get ready!

Also, some OEMs were misusing the hybrid subsidies given by government which led to the overturning of rules sometimes.

Originally Posted by deetjohn

Lobbying, protectionism, cost cutting, huge entry barrier due to high taxes, myopic, baffling & inconsistent regulations, quality and safety issues.... I see many parallels between both stories.

This rot will only worsen unless the government takes some very bold steps to benefit the customers and all the players in the long run.

Absolutely a concern, and we have no visibility from govt's policy to address these points except for safety and emission, I somehow feel government is in a ego trip with auto industry and also, they are not willing to acknowledge the fact that Auto and auto ancillary industry employs most people in manufacturing sector and contributes significantly towards GDP. They are cutting the golden goose for normalizing today's tax deficits targets.

Originally Posted by GTO

Well, there is a saying in the auto industry = "There is no problem that a good car cannot solve". Of course, in recent times, I have tweaked that statement to say "There is no problem that a good crossover / SUV cannot solve" . Ask newbie Kia which was a nobody in India 2 years ago.

I have a different perspective to your point. Take the example of Nexon a better VFM product, was priced brilliantly yet wasn't able to compete with Brezza or the later entrant Venue, people acknowledged Nexon only after the safety ratings came out and vocal for local/some nationalist agenda was pushed. Tata had to align itself towards such agendas to sell a good product which many companies couldn't afford to.

[saikishor]

Putting complete blame on government policies does not make sense. When new entrants like Kia and MG can invest crores in India, why can’t an established player like Toyota do the same? Toyota just shelved their CBU plans as well because of the hefty taxes levied by the government. But Volkswagen made good use of the 2500 import rule. What did Toyota do? Partner with Maruti and launch lame rebadged cars. And yeah, lets not firget how GM sunk their own ship. Instead of launching cars from their global portfolio, they launched rebadged chinese cars. Fiat products had reached the end of their lifecycle, and they had no other new product to offer. All I have to say is it isn’t the government that is supposed to be squarely blamed at, but the company’s lacklustre products and aftersales services also have a key role in playing spoilsport for the company.

[Reinhard]

I do not buy into the thought that government policies or tax structures are causing foreign brands to leave India.

The proof that is not true is simple. The top 2 car sellers in India are Suzuki and Hyundai/Kia. Foreign brands. So thats that.

The one reason why these companies fail are because they don't want to invest a lot in India for long term to establish. They want to import CKD and CBUs & make money. Customers that then face issues have to wait for months to get simple part replacements. While I'm all in for a global open economy, I certainly want jobs to be created in India if profits are being made in India. So the car makers must invest big in India if they want to do business here. I don't think the taxes & policies are that prohibitive. Certainly not out of the world compared to many other countries of the world. Premium brands only want to import & sell. Not done!

The car makers don't want to develop India specific products which is understandable. Our budgets are limited. Given the crowd, crumpled infra and road conditions, using exotic cars is impractical even for the elite too. This means sales are anyway low. Add to that import duties and the costly cars are even costlier. So its logical that these companies don't want to do business here & leave.

All said - I still say good riddance. If you don't want to invest in India - better leave. We have enough good car makers here for majority of the population's needs. Government policies need to be slightly populist (not communist) rather than elitist anyway.

[kaushikduttajsr]

I look at our beloved auto sector and fail to decide whether to launch, cry or cringe. Every single time!

I'd avoid singling out one particular stakeholder and lambasting them. India is a difficult market - low per capita income, poor infrastructure, poor govt. vision and consistency in policies, high taxation.

Amidst us discussing features and safety rating a car should have, the likes of Maruti and Hyundai have cracked the code of what majority of Indian market wants; and clearly that's not (a) safety, (b) power, (c) driving dynamics. Look at Mahindra's best selling vehicle for over a decade - the humble Bolero is a favourite in the hinterlands of India. An alto and celerio is what an average Indian in a tier iii market aspires to.

We Indians are risk averse. And rightly so. How can we take a risk when buying a car with 50%+ of our annual salary (ballpark of 3lpa?)? That leaves us with little choice when govt. decides to milk the sector.

I think it is also a chicken and egg story. The govt. fleeces us with highest taxes on cars and flying since they think both are luxuries. High taxes make both of these experiences expensive and therefore a luxury for a large segment of our country. Tax is a wedge and deterrent for consumption. Folks up in the bureaucracy chain will do good to consider how driving down taxes spur demand, that spurs overall tax revenue and helps build infrastructure that employs more people, generates more demand, more consumption and more taxes.

Similarly, it's a chicken and egg story for automakers. Manufactures do not bring in international best sellers as they need massive re-development costs that in turn reduces the lifetime profitability of such re-designed models. Global OEMs like Ford, Toyota, Honda, VAG lean on to cheap, old and proven platforms for as long as they can, leaving the country at the end as they did not invest and we're unable to grow their sales share in an extremely competitive market. KIA entered India with all guns blazing and look at where they are!

Summarizing, we need the govt. to (i) treat transportation as a basic necessity rather than luxury, (ii) better and consistent taxation along with revocation of selective taxation policies such as 1.2l and 4m, (iii) improve road infrastructure. We need OEMs to market the right set of attributes and create basic automotive knowledge - dynamics, safety, total cost of ownership etc. While efficiency is important, sacrificing 1kmpl to get a heavier car with 1* higher rating is worth it (I'm not saying heavy car = safer). Lastly, standardizing requirements across geographies or matching them with high vol markets create a ready to sell platform. Having policies in-line with some of the highest selling markets (maybe look at China?) in the same earning range can lead to lower re-development costs and therefore launch of more options at lower price points, generating more demand.

Lambasting manufactures or govt. is not going to change anything, at the end, it is us consumers, losing out.

[krishnakarthik1]

None of the above. Real reasons why big companies leave India are:

1. Poor law and order situation
2. No courts that proper dispute resolution mechanism
3. Scary labor laws
4. Highly corrupt and non transparent land dealings
5. No business infrastructure
6. Takes a long time to get permissions
7. Tax harassments

And a lot more depending on the category of the business

[laser2707]

It's not all doom & gloom. Yes, big brands have stopped selling their cars in India, at the same time ramped up their back-end operations in India. This may not be visible to us but it's true of all global OEM's.

Case in point is GM. While they have completely exited the Indian PV market & are involved in a messy disposal of their manufacturing facilities, their procurement base through Delphi has expanded manifold. I have an ex colleague who works in Delphi and casual conversations with him indicate the scale of their procurement in India.

Another is Nissan / Renault. They have a massive development centre in Chennai. I understand they are responsible for developing the Kwid, Redigo etc. Most other brands like Ford, Mercedes Benz have development centres in India working on connected vehicles & other advanced technologies.

Global OEM's in that sense have not exited India. This brings us back to the discussion about us as car buyers. Why this step-motherly treatment? I think its a combination of the reasons listed above. I voted for lacklustre product development.

My take is that OEM's enter India with a lot of fanfare & product plans. Soon enough they realize that Indian customers trade off safety for fuel economy. They are content with driving decades old models because everyone else seems to be driving it & there's safety in numbers.

Lastly as has been discussed often on TBHP, driving is not a pleasure any more. So the approach to buying cars for most Indians is like buying appliances. We settle for the blandest possible option.

[alisajid]

Price of Honda Civic 1.6 CVT (a base variant) in Dubai as per todays exchange rate is approximately $20000.In US the Honda civic models start from $20,000 and max out to $23000 approx for top trim level. In India a similar spec Civic cost approx $28,000 for the base variant and goes up to $32000 approx !!!!.

Our per capita income is $2104 as per 2019 data which is quite healthy given our previous record and we are moving in the right direction. However there are very few who can actually afford more than $10000 product as of now and fewer still who can buy a $20,000 product. Given the relatively small taxable pool of our country, govt will invariably target high cost products for more taxation. This takes the edge of our market for any business, our taxes are high and purchasing power low.

We could only have a truly global line up with quality products available in India when at least 50% of our people are middle class and our GDP reaches $6000. Before that its just wishful thinking to expect any quality car being sold in volumes in India.

Hyundai and Kia maybe are exception, however given their global reputation for dismal ageing and questionable logetivity they are still considered entry level brands in global market. They do have some premium products in their line up but again not available in India. I guess we have to be patient to have quality global brands make a clear footprint in India.

[sridharj77]

Its a combination of multiple factors, including our population density, road sizes, diverse usage model pan-India, need to develop specific models for 1 country alone, service availability outside the dealer network and the need to maintain a differentiation.

In the US, if you are in the middle-class, you can buy a Ford Taurus and if you are rich, you can buy a high-priced Ford Mustang. There is not much focus on the brand as a differentiator. In India, we have the concept of "Rich brands" - i.e., brands only the rich can and should buy! If Maruti or Tata bring a 75-lakh car, on par with the Germans, no one will buy them

Customer may be king, but we can also have foolish kings. Some brands just don't want to play in some areas, where they may not be valued enough. Fair, I think.

[charanreddy]

I am yet to see a manufacturer failure despite doing everything right. If our market was so scary Kia and MG would not have succeeded. Hell we have given people second chances (Opel / Chevrolet). Indian customer is a smart operator and product needs to be good on multiple dimensions or exceptionally strong in any one. Chevy has failed due to its pathetic product lineup, Honda as their product don’t make sense (no Automatic for WRV when the amaze gets one ), Nissan as they lost complete focus on the market. When ever a sensible product with acceptable value proposition was launched it became a hit ( Triber, Nexon, Tiago, Hector, Creta ). I don’t see what the manufacturers have to crib about.

[Ultim8]

Originally Posted by Dr.Abhi

What can be the reason??
1. Our Government and their frequently changing policies/weird rules to blame.
...
5. Herd mentality. We indians are too risk averse and want to stick to one or two brands in the long run.

True! All of these factors contribute to low sales volume of brands apart from Maruti Suzuki, Kia & Hyundai.

Originally Posted by Nithesh_M

Look at what its led to. Koreans joining Maruti in selling unsafe cars with unstable body shell for 20 lakh rupees that isn't even the same product as its international spec model. VW can't launch international Polo or Fabia because stupid 4m rule again and also resorting to dumbing down international platforms to make regular Joe affordable European cars somehow still barely affordable to us.
Do you not see a pattern here?

This! Players who don't want to cut costs on body structure or not want to provide features like Air Purifier, tiny sunroof, auto wiper & headlamps etc. at the cost of reduction in structural integrity are losing to Maruti, Hyundai & Kia in sales volume.

Originally Posted by Nilesh5417

The sub 4m length and sub 1.2/1.5 engine rule has been around for over a decade if am not wrong. It's a lame excuse that keeps getting used over and over again.
The manufacturers that are not doing well simply do not have the required commitment to our market. Saying India is a big market for us and not walking the talk is what has led to their current state.

Yes. Maruti, Hyundai & Kia have succeeded in sub 4m hatchback and crossover markets, but at what cost? Unstable body structure, features which many did not ask for?

The main reason for the lack of engines larger than 1.5L apart from BS6 emission norms is the excessive taxes. This lead to the lack of halo or enthusiast cars in lower segment, thanks to the resulting excessive prices. All we get are engines ranging from 1.0L to 1.5L in this segment.

Originally Posted by DonHyd

I think all the reasons are valid to some extent. Government should be very clear about the future plan and set realistic goals for EV migration. Similarly the tax structure is unfair to some segments particularly CBUs. Without knowing volumes, it is not practical for global biggies to invest in local assembly.

Herd mentality is also a big factor which leads to proverbial chicken egg situation. Without huge volumes, it is impossible to open 1000s of dealerships throughout the country and without them huge volumes are impossible. For herd mentality, let us take swift vs figo. Imagine if only people bought 15000 figos and another 15000 aspires every month, why will Ford not be able to match maruti in service centre reach, etc? Why will Ford even think of leaving India? Similar is the case with many good cars which deserved much higher sales.

You've echoed my thoughts, but with a precise information! If other players decided to compromise on body structure and safety features to cut costs, we would only have coffins on wheels to choose from! Fortunately, companies like Ford, VW, Skoda, Tata etc. have not compromised on the aforementioned.

Originally Posted by Hayek

Why should a global auto major focus on India?

Consistency of Policy - You set up a CKD assembly line but suddenly find that you need to assemble not just cars but also engines and transmissions to be viable.
Ability to tap global scale economies

Cannot agree more! If companies feel that they cannot sell a product in large volumes while operating on razor-thin margins and without compromising on important components, they have no reason to continue selling or developing an India exclusive product just to sell at low volumes.

We customers who want a safe car and/or fun-to-drive car are the losers unlike a regular Indian customer with "kitna deti hai" attitude, who will end up buying a Maruti, Hyundai or Kia car, with or without being aware of the safety of those cars.

Originally Posted by charanreddy

I am yet to see a manufacturer failure despite doing everything right. If our market was so scary Kia and MG would not have succeeded. When ever a sensible product with acceptable value proposition was launched it became a hit ( Triber, Nexon, Tiago, Hector, Creta ). I don’t see what the manufacturers have to crib about.

Manufacturers have committed and still continue to commit blunders now. Still, manufacturers who genuinely want to provide safe cars at good VFM proposition are struggling to sell at large volumes, thanks to the herd mentality and risk-averse mindset of Indian customers (which is slowly changing for good nowadays).

As for sales volume, how did Nexon fare compared to Venue or Creta? What about Tiago vs Swift/Ignis/Celerio? Altroz vs Baleno?

Manufacturers will never want to invest in an India exclusive product if they are not able to sell their existing products in a large volume.

[Stribog]

Originally Posted by jkrishnakj

Voted for the Changing government tax policies.

If one were to study the Vodafone and Cairn Energy case studies that the government lost (losing ), it makes a classic conclusion of what a government should not be doing.

Politics aside , the current government who was so against the ‘retrospective’ tax introduced by the then UPA government is still trying to purse these cases.

What more shall we say ?!

We need the biggies / corporates to feel comfortable and transparent and have a trust in the nation - regardless of which government comes to power.

The FDai, FPI that's hitting all time highs in India seem to disagree with this "trust"issue.

Also a Kia or SAIC / MG also have the same tax laws and they have hit it out of the park with their 15l+ offerings. Why?

The only answer is the OEM's with their insipid line up deserved to fail. Market forces always triumph

[sabujsen]

India is Value for Money market predominantly. Manufacturers often mistake VFM = Bad designs. I think Value is how much bang for the buck do i get. Someone sees value in a 40 lakh fully loaded SUV while someone sees great value in a fully loaded 9 lakh hatch.

Several products are launched with keeping costs in mind and end up being a sales dud as consumers don't want dated products.

Also the Indian consumer is now exposed to global models and features and does not want to settle for less.

Now the point is manufacturers need to fine that right balance between cost and aspiration. Look closely several new entrants offering innovative products are doing very well. The time has changed, we are open to buying new brands as long as they offer us a global product.

This is not the conservative India of the 80s, the new generation will splurge. They just need to see that spunk in a product.

Big companies are lazy to develop innovative products for us. They tend to just re-engineer halfheartedly. Unless that changes, the only way is the way out.

[manchandap]

I voted for the following:

• Our Government's ever changing policies / weird rules.
• Lacklustre product development/ aftersales support.
• Indian customers unique requirements unmet by foreign brands.

A typical example of the first is pricing policy of fuel - how reduction in the differential of petrol and diesel price has made diesel cars less lucrative.

The other two are self explanatory. E.g. Tata and Maruti made tonnes of money by using Fiat diesel Engines in their Indicas/Swifts/Dzires. While Fiat was not able to establish itself due to lack of dealer network and ASS.

Other bitter reality is that car is still a luxury in our country, given our per capita income. This makes us a price conscious market. We need to look beyond metros for this.

Even a non-tech savvy person does his homework properly before buying a car, most of which may be by 'word of mouth' rather than online.

Indian customers are one of the smartest. They look at TCO of a car and not just the bling. TCO comprises not only of the initial cost but also long term maintenance cost and fuel efficiency.

It is a no brainer to understand that a car which is sold in large numbers will have good availability of spare/repair options outside of ASS. If an ASS knows that a car can be easily serviced outside (by what we call FNG), they will think twice about overcharging a customer.

This is one of the reasons why some brands can sell their cars like hot cakes. Sorry, we can't call this as herd mentality . To me this is smart choice and may be bit of a compromise since no car is perfect.

My logic: Why should I be at the mercy of ASS for repair/spare/service of my car. Going to ASS should be my choice and not compulsion.

[sgmuser]

For me, the infrastructure is not enticing for a car buyer. Either the infrastructure is bad (bad/narrow roads, too many pot holes, time taken per km due to congestion which in turn is due to poor planning and lack of vision in building infrastructure for future rather than wait for everything to fail then try to fix on the fly) mostly or too costly to afford (toll/fuel costs).

Secondly, cost of owning cars itself is absurd. Almost 50% of the over all cost is for tax is unfathomable in any way for an essential industry. Even a country like Singapore with a limited geography manages these issues very efficiently, albeit the fact that the car ownership is a luxury there still.

Government policy which are knee jerk reactions rather than some thoughtful strategic visionary are hurting the industry very badly. Simply, the industry is mismanaged by inexperienced people including the current Fin Min.