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Old 27th September 2021, 10:21   #16
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Re: 64,000 jobs lost due to automaker exits in India

Principle of Creative Destruction at work here.

https://www.investopedia.com/terms/c...estruction.asp

Let me remind the forum that despite all this "woe is me" type, "end of auto manufacturing in India" lamenting, our FDI is touching new heights.

Particularly our FDI in auto manufacturing.

https://pib.gov.in/PressReleasePage.aspx?PRID=1756999

India attracted $ 27 Bn in FDI from April 2021 - July 2021.

Of this, a whopping $ 4.x bn is in the auto sector.

In other words, in the first 4 months in FY 2021, we have received on average Rs 7,500 cr of FDI every month.

Perform or perish.

And let me also remind the forum that 1999-2019, Indian PV market grew the second fastest with a CAGR of 9.x % (# 1 was China @ 22.x%) and the 3rd position was iirc Brazil @ a tepid 3.x%.

So no, the market is not dead, it is thriving, even if it sustains this 10% ballpark for another decade, it will become the 3rd largest auto market on earth. If that is not a large market, I don't know what is.
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Old 27th September 2021, 11:58   #17
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Re: 64,000 jobs lost due to automaker exits in India

I don't understand why the govt. should be blamed for these job losses. Do we really want more PSU like culture that fosters laziness and incompetence and hinders progress?

Companies and industries rise and fall all the time. New jobs are created with the rise of new companies and industries and old jobs are lost when industries die and companies shutter. That is what progress looks like.

There is no point advocating for a stagnant PSU like socialist culture that stifles innovation and encourages mediocrity but provides jobs to people who are happy to arrive at the workplace, sip their cuppa, chit chat, do some work if they are in the mood and go home at the end of the day and make yet another attempt to increase the voter base.

Of those people that lost jobs, the skilled one will find new ones. If Ford is closing shop, MG and BYD are opening new factories. The thing people should be worried about is whether the industry as a whole is growing. As long as there is demand, new players will come to replace the old ones and in the process create new jobs.

If you want to blame the govt., blame them for our poor HDI (Human Development Index) -- poor quality and availability of education, poor infrastructure, red tape, non functioning justice system, rampant corruption and no real way to fight said corruption. What we need is more oversight on all the parasites in govt. agencies and offices and a way to punish these vermin.

If you want to blame the govt., blame them for the lack of new job creation and not the loss of old ones. New jobs can only be created when it becomes easy to turn ideas into businesses without fear of the red tape and convoluted expensive paperwork. A lot of capable people would rather emigrate than have feed the disease.
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Old 27th September 2021, 12:14   #18
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Re: 64,000 jobs lost due to automaker exits in India

I do agree that Ford really hasn't thrown the kitchen sink at the Indian market, like the Koreans have, or even more recently MG has. Having said that, in my opinion, India is a very very difficult place to do business.

a. Policies keep varying very frequently that make it difficult for anyone but the most nimble to adapt and flourish.
b. Most policies are skewed in favor of the voting junta. Most taxes be it direct or indirect do not benefit the upper middle class and above societies - which is the bulk of us on this forum.
c. The problem is always a Chicken or Egg with Govt. I believe the Govt.'s role is to take initiative to create an environment for businesses to flourish, in an equal playing field. However I feel it is left to the private sector to take initiative in an environment which is always uneven due to a plethora of reasons.

That said, I firmly believe that Ford is in this position purely due to their lack of initiative, and multiple missteps in a country which is not very forgiving to missteps.
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Old 27th September 2021, 12:24   #19
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Re: 64,000 jobs lost due to automaker exits in India

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Originally Posted by AZT View Post
Ford left because they did not see growth in the auto sector which is a more systemic issue. Taxes need to come down, else more people will keep going for used cars which anyway hurts these companies.
Taxes. fuel costs, insurance costs are definitely a factor along with lack of parking space in Delhi-NCR which is the biggest car market by some distance. 10 Yr/15 Yr scrappage rule. Odd-even policy. These things are taking the joy out of being a driving enthusiast.
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Old 27th September 2021, 12:40   #20
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Re: 64,000 jobs lost due to automaker exits in India

So, to understand the underlying reason for Ford's exit is not the company's fault but the govts. taxation. So, ideally if the govt. reduces taxes, Ford will get back and be a successful entity. This is beyond logic. Ford decided to exit because no one was really interested in purchasing their products. If taxation is the reason, I wonder how BMW, Benz are sticking around in India and making profits.
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Old 27th September 2021, 12:52   #21
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Re: 64,000 jobs lost due to automaker exits in India

@Prathgodbole on Twitter: Monthly car registrations in India peaked 2011-12. India has registered less cars every year since 2011-12 for the next 10 years. Even production was in a steady downtrend even before covid hit.
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Last edited by kushagra452 : 27th September 2021 at 12:57.
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Old 27th September 2021, 13:28   #22
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Re: 64,000 jobs lost due to automaker exits in India

Taxes are just one part of the pie. For me, the infrastructure in metros means that any car larger than 4 meters is difficult and stressful to use. If Covid recedes, it is highly likely that people will again start looking at Uber/Ola more.

Short of moving jobs/industries to tier 2 cities and building better infrastructure there, I don't see an easy way to revive auto sales growth at levels such as 10% which will attract investment. And let's face it, that sort of initiative takes decades. The current traffic levels in the big cities are already close to being intolerable.
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Old 27th September 2021, 13:44   #23
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Re: 64,000 jobs lost due to automaker exits in India

I dont understand but correct me if i am wrong. The car manufactures were paying excise duty before GST regime. When they bought certain parts and components, they paid for excise duty and sales tax which was levied by the supplier. On the final product, they also paid sales tax. The GST regime has done only one thing. It has abolished the sales tax and Excise duty (12+14%+ 2% CST) and bought in a GST. Further,, what ever the input components that the OEM is buying from vendors, it can use the same to offset by out put GST. So this should avoid cascading impact of taxes and then reduce the final price payable to customer. Road tax is not covered under GST before or now. So there is no delta due to that. Not sure why GST is increasing the prices. Either, the manufacturer is making the margins or Govt. Its not clear. I feel the Govt should have an audit to ensure that GST gains are actually benefitting the customer. Paying Road tax and Tolls are actually double taxing the same event. I feel we should get a credit of Road tax paid in our Fast Tags which can be used against toll payment. I know its wishful thinking but is there not a logic to it
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Old 27th September 2021, 14:18   #24
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Re: 64,000 jobs lost due to automaker exits in India

Car production is stagnant or declining in most countries except China.
Modern cars are more durable, thus the upgrade cycle is longer.
India is doing just fine, demand is strong even with the taxes.

64,000 jobs lost due to automaker exits in India-car-prod-trend.png
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Old 27th September 2021, 15:20   #25
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Re: 64,000 jobs lost due to automaker exits in India

While it's a fact that Ford didn't do enough to lap up the Indian market, the string of steady exits by automobile manufacturers in India need deeper introspection by policy makers. This heavy machinery industry besides employing directly also spins off a wider employment through the ancillary industries.

While it's true that Maruti and Hyundai are going strong, multiple forums here have pointed out that Ford used to make better sturdier cars. I wonder if the government mandates the right safety aspects, will Maruti and Hyundai continue being "value for money"?

Also, automobiles in India are still purchased by the upwardly mobile people. Folks who are migrating from middle class to upper middle class and beyond. The financial distress in India has increased post the pandemic (though I think we were already on a downturn)and that may have also played on the executive minds to see that there is no hope of near future and hence recede all investments.

Hopefully in the coming years, the economy will improve and we will see more people migrating from lower economic classes to the higher ones thus giving more purchasing power in their hands and thus making India a lucrative investment destination again
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Old 27th September 2021, 15:47   #26
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Re: 64,000 jobs lost due to automaker exits in India

If there are not enough customers for a manufacturer's cars what can the government do? Cap the total production, give quota for each company and ensure the people have to buy them? Like what was happening in the good old Amby-Premier-Standard days?
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Old 27th September 2021, 16:29   #27
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Re: 64,000 jobs lost due to automaker exits in India

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Originally Posted by Gansan View Post
If there are not enough customers for a manufacturer's cars what can the government do? Cap the total production, give quota for each company and ensure the people have to buy them? Like what was happening in the good old Amby-Premier-Standard days?
Is that really a solution. To go to a version of License raj? Wouldn't it be better if there was consistency and clarity in policy making.
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Old 27th September 2021, 19:30   #28
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Re: 64,000 jobs lost due to automaker exits in India

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Originally Posted by Raghu M View Post
So, to understand the underlying reason for Ford's exit is not the company's fault but the govts. taxation. So, ideally if the govt. reduces taxes, Ford will get back and be a successful entity. This is beyond logic. Ford decided to exit because no one was really interested in purchasing their products. If taxation is the reason, I wonder how BMW, Benz are sticking around in India and making profits.
Absolutely agree with this point, mate . I have mentioned this in another post as well.

"Ford India started its operations in late 1995 and in another 6 months (May 1996) Hyundai India started its operations - both started their business in the outskirts of Chennai. Both went through the same tax structure and consumers. But see where Hyundai India is now and where is Ford India. It's about having a clear business vision and strategy specifically for India which was clearly lacking with Ford".
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