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Why is Auto Industry Bleeding currently?
1. Post GST truck & CV movements have improved by anywhere between 30-40% due to removal of hurdles at border checks.. this has improved existing vehicle utilization by 30%
2. Govt has increased the allowable tonnage load by 25%
1/n
1. Post GST truck & CV movements have improved by anywhere between 30-40% due to removal of hurdles at border checks.. this has improved existing vehicle utilization by 30%
2. Govt has increased the allowable tonnage load by 25%
1/n
3. both these factors have improved comm vehicles utilization by almost 50-60%..
4. this means for existing fleet to reach optimal utilization, it needs 50-60% more load than earlier before new vehicles can b planned
5. Regulation change from BS4 to BS6 wef from 1/4/2020
2/n
4. this means for existing fleet to reach optimal utilization, it needs 50-60% more load than earlier before new vehicles can b planned
5. Regulation change from BS4 to BS6 wef from 1/4/2020
2/n
6. This means customers will be hesitant to buy any new BS4 vehicle at this stage due to fear of severe penalty & also reduced resale value of vehicle post 1/4/20
7. This means any uptick in CV has 2 happen if cmpys get BS6 ready vehicles out into the market before 1/4/20..
3/n
7. This means any uptick in CV has 2 happen if cmpys get BS6 ready vehicles out into the market before 1/4/20..
3/n
8. BS6 vehicles will be expensive than BS4 so higher budget has to be allocated for it
9. this will need more funds at affordable int rates to spur growth (some action from govt n banks is seen now)
10. govt has eased norms for PSBs lending to NBFCs which wl help
4/n
9. this will need more funds at affordable int rates to spur growth (some action from govt n banks is seen now)
10. govt has eased norms for PSBs lending to NBFCs which wl help
4/n
11. As regards passenger vehicles, it also has BS4 to BS6 & financing challenges as mentioned above.
12. + there is spike in insurance cost frm 1 to 3 yrs at time of buying
13. some states hv spiked Registration charges
14. fear of reduced resale value once EV settles down
5/n
12. + there is spike in insurance cost frm 1 to 3 yrs at time of buying
13. some states hv spiked Registration charges
14. fear of reduced resale value once EV settles down
5/n
15. In urban areas, with metro penetration improving & ola/uber becoming easily usable, car as a means for daily commute is reducing drastically but at same time car for wk ends usage is increasing but ppl r looking at SUVs for that purpose n not hatchback / sedan..
6/n
6/n
16. The country's largest car mfgr - Maruti - has not had a successful SUV in a long time now & hence the impact is felt more.. they hv not had many new models in past 2/3 yrs
17. those who have a robust SUV pipeline will do well in urban areas in coming yrs
7/n
17. those who have a robust SUV pipeline will do well in urban areas in coming yrs
7/n
18. in the rural areas, hatch back & sedan wl still b consumed due 2 price & financing issues but problems mentioned above do persist there 2
19. Auto industry has met with regulations, policies & demand estimation / planning headwinds all at same time hence the turmoil
8/n
19. Auto industry has met with regulations, policies & demand estimation / planning headwinds all at same time hence the turmoil
8/n
20. Need of the hour is to trust the industry capabilities (which is amongst the best in the world) & trust it will fight back..
key is to be patient..
9/9
key is to be patient..
9/9
