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Why is Auto Industry Bleeding currently?

#Thread (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%

#Thread (2/n)
3. Both these factors have improved commercial 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 be planned.

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5. Regulation change from BS4 to BS6 wef from 1/4/2020.

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

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7. This means any uptick in CV has to happen if manufacturers get BS6 ready vehicles out into the market before 1/4/2020.

8. BS6 vehicles will be expensive than BS4 so higher budget has to be allocated for it.

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9. This will need more funds at affordable interest rates to spur growth (some action from govt and banks is seen now)

10. Govt has eased norms for PSBs lending to NBFCs which will help.

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11. As regards passenger vehicles, it also has BS4 to BS6 & financing challenges as mentioned above.

12. There is spike in insurance cost from 1 to 3 years at time of buying.

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13. Some states have spiked Registration charges.

14. Fear of reduced resale value once EV settles down

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16. Country's largest car manufacturer - Maruti, has not had a successful SUV in a long time now & hence the impact is felt more. They have 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.

#Thread(9/n)
18. In rural areas, hatch back & sedan will still be consumed due to price & financing issues but problems above do persist there too.

19. Auto industry has met with regulations, policies & demand estimation / planning headwinds all at same time hence the turmoil.

#Thread(10/n)
20. Need of the hour is to trust the industry capabilities (which is amongst the best in the world) and trust it will fight back. The key is to be patient.

#Thread (11/11)
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