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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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      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.

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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.

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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.

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