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    Thread: India GDP is growing @ 7%, then why Auto Industry is slowing down ?

    1. #11

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      Quote Originally Posted by Nomad View Post
      so let us wait till Aug Mid to know the trend of reversal or not
      Manufacturers are not taking it easy on the dealerships, and a vast majority of them are in financial trouble. It is almost spooky to see the number of dealerships on the verge of shutting down, or have already downed shutters. Hope the turnaround comes before we lose more dealerships.
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    2. #12
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      Quote Originally Posted by tadukuttan View Post
      Manufacturers are not taking it easy on the dealerships, and a vast majority of them are in financial trouble. It is almost spooky to see the number of dealerships on the verge of shutting down, or have already downed shutters. Hope the turnaround comes before we lose more dealerships.
      Yes, I have read about these troubles due to inventory pile up, resulting in dealers pushback to manufacturers to stop or go slow on production since Dec 2018.

      Slowdown forces auto companies to cut production - Times of India

      Indian auto retail: Dealership inventory pile up despite production cut: FADA, Auto News, ET Auto

      There is about 45-50 days sales equivalent inventory in the dealerships, so it is about 12% to 13% of the annual sales in terms of volumes.

      I occasionally meet owners of dealerships and also speak to my known folks at Auto OEMS. Generally There are two basic kinds of dealerships, Historically strong, trust-relationship-competence based and opportunistic-recent entrants or switchers from one brand to another. the first type are the backbone of auto distribution and second ones are considered upside to expand the reach. in down market situation, the second types will face more difficulty and can not sustain and likely to fold back, while the first kinds remain and are supported. some good ones among the second type get relocated to new growth geographies and get OEM support as well.

      During down market situation, Good and Strong OEMS will work with Dealers to increase the competence of the service network, better customer service and satisfaction. strong dealerships have also built strong service capabilities that ensures customer foot falls, built used car sales subsidiaries which do booming business in a down market scenario, also get better financial support from OEMS to refurbish the dealership sales front etc etc. everyone knows it is cyclical, this too shall pass.

      the real problem is for opportunistic dealerships who have tied up with opportunistic brands / OEMS. of course that is the live in relationship based on the opportunity, moods and seasons. for them the Honeymoon is over, it is life once again.
      Last edited by Nomad; 14th May 2019 at 10:47.

    3. #13
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      AUTOMobile Sales Decline brings down Auto Insurance business as well.
      Slow auto sales hurt motor insurance business - Times of India

      Quote Originally Posted by Nomad View Post
      (3) Arrival of Monsoons in June and trend of Good-Normal-Worse rains will be known by mid Aug (hopefully)
      Yesterday Skymet, made their prediction about monsoons
      Monsoon likely to hit Kerala on June 4, progress slowly: Skymet | India News - Times of India

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      Monsoons expected to be "below normal"

      Here are two good reads on short term and long term outlook

      Here is the last quarter Analyst report by HDFC on Auto Sector in India
      Sector-Update-Auto-Two-Wheeler-Industry-Jan-2019.pdf

      Here is the research paper by Mckinsey on Indian Automobile Sector
      The future of the automobile industry in India | McKinsey.pdf


      EDIT:
      IMD forecast says monsoons start from June 6th
      Monsoon to be delayed by five days; to hit Kerala on June 6: IMD
      Last edited by Nomad; 15th May 2019 at 12:21.

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      Quote Originally Posted by coolash View Post
      GDP is still growing @7%++
      This itself is a big hoax

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      Now that elections are over, black money will probably roar back into the system and car sales will probably jump in another month.

    6. #16
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      Quote Originally Posted by ramakant View Post
      Now that elections are over, black money will probably roar back into the system and car sales will probably jump in another month.
      i will call it liquidity led positive sentiments.

      Some of those sentiments reflected in yesterday's rally of the decade.
      Sensex sets new record! Posts highest single-day gain in 10 years

      exit polls provided some sort of direction for these sentiments to move towards positive side.

      View: The mystery of India's vanishing working capital - The Economic Times

      we are far away from a recovery, at least couple of quarters if not more.

      Click image for larger version. 

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      Hopefully ....

      Last edited by Nomad; 21st May 2019 at 08:51.

    7. #17
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      May 2019 Automobile sales decline

      Maruti Suzuki down by 25%
      Honda down by 28%
      Tata Motors down by 26%
      M&M down by 1%

      Maruti Suzuki: Passenger vehicle sales continue to slide in May - The Economic Times

      Honda Cars sales dip 28 per cent to 11,442 units in May - The Economic Times

      Toyota Kirloskar sales down 6% at 13,066 units in May - The Economic Times

      Tata Motors domestic sales drop 26 pc to 40,155 units in May - The Economic Times

      Mahindra EV sales rise by 2.5X
      Mahindra's EV sales rise over 2.5 times to 10,276 units in FY19 - The Economic Times

      Apolo Tyres investing 2800 Crores
      Apollo Tyres to invest Rs 2,800 crore in FY20 - The Economic Times

      New Cabinet has taken over, New Finance Minister has taken charge, New Minister for Commerce & Industries have taken charge. Minister of Road Transport continues to remain same. Ministertry of Electronics IT, Telecom has been put under same minister, New Budget is likely to be presented on July 4th 2019.
      There are already cues about CRR & Interest rate cuts likely to happen to improve liquidity, Industry is asking for GST cuts on automobiles as well as incentives to scrap old vehicles.

      GST cut on auto, incentive to scrap old vehicles on SIAM's budget wish list - The Economic Times

      Monsoons appear to be further delayed, heatwave continues, temperature has exceeded 44 Degrees is many states and have exceeded 50 in Rajasthan.
      Rajasthan sizzles under intense heat, Churu records max temp of 50.8 deg C - The Economic Times

      About 42% of India abnormally dry, Telangana, Maharashtra worst affected by poor rainfall - India News

      Water Scarcity is expected. All forecasts say it will be below normal rains in south, western, central, north India which will affect the main consuming regions. Government has formed a new Jal Shakti Ministry which is expected to manage water resources.

      This quarter Official GDP forecast is shown as 5.8%, drops India below China, US has ended tariff benefits for India's exports into USA, crippling some of the competitiveness factors.

      India Exports: Fresh headache for PM Modi, Piyush Goyal as Trump ends preferential trade treatment for India

      clearly outlining the tasks for Mr. Modi and his Cabinet. I am still wondering how GST collections are hitting 1 Lac Crore if all statistics with Industrial Production and Trade showing dip.

      Government collects Rs 1,00,289 crore GST in May - The Economic Times

      India has climbed only one step in ranking through the last year and have lot of things to do to improve further. The First Budget sets the tone for economic reforms, government spending, improvement in business climate, tax reforms etc.
      Last edited by Nomad; 3rd Jun 2019 at 07:18.

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      What is the actual GDP Growth Rate ? Indian Express story tries to find answers.
      India?€™s GDP growth: New evidence for fresh beginnings | The Indian Express

      How to sell more cars ?,

      All inclusive rental lease without any down payment from Car OEMs themselves could be one of the option.
      Top automakers offer vehicles for a monthly rental with no down payment - The Economic Times

      Reducing the GST on Automobiles could be another way to make it affordable !!!, but will it happen?, is question to which answer will be known by July 5th hopefully.

      More items likely to go off highest GST slab - The Economic Times

      Increase in Third Party Insurance Premium likely to increase onroad price of the vehicle and recurring renewal costs.
      Hike in third party insurance premiums to hit auto sales further: FADA - The Economic Times

      All commercial use cars to be EVs from 2026, this will make life of the newly bought taxi/cab to be limited to 7 years, this will make many people / companies / service provides reduce their fleet sizes, unless breakeven is quicker or returns superlative, which is not the case.

      All new cars sold for commercial use to be electric from 2026 - The Economic Times

      India set to order Uber, Ola, other taxi aggregators to go electric

      Already efforts on to push this EV deadline by 10 years later.
      Dream or nightmare: Why India should postpone its electric vehicle plans for ten years - The Economic Times

      Some consolidation efforts in self drive rentals, which means growth and expansion will be on back burner. Merger, integration, consolidation, re-organization, efficiency improvement etc might take at least an year if not more.
      Self-drive firm Zoomcar looking to hitch a ride with rival Drivezy

      Because of all these, vehicle sales may not bounce back soon
      Toyota: Vehicle sales unlikely to bounce back soon: Toyota Kirloskar executive

      Hence auto companies reduce production itself.
      Maruti Suzuki: Auto companies slam brakes on production
      Last edited by Nomad; 14th Jun 2019 at 11:22.

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      Earlier it was due to elections. Now I wonder what the government will come up with.

    10. #20

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      Quote Originally Posted by Nomad View Post
      clearly outlining the tasks for Mr. Modi and his Cabinet. I am still wondering how GST collections are hitting 1 Lac Crore if all statistics with Industrial Production and Trade showing dip.
      GDP figures are still positive but at a Low pace, so GST collection are expected to rise, but at slower rate. Also, GST collection are not inflation adjusted i.e. You pay GST on total price including inflation, whereas GDP numbers are inflation adjusted, so rise of GST is partially due to inflation.

      GDP figures crossed 1,00,000 first time in March, 2018 and it has taken a full year to start exceeding that amount consistently, which shows the state of the economy.
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