[Turbohead]

Another reason which I believe is missed out: Fresher salaries have been stagnant for the past 10 years(unless you are the very few who have graduated from a reputed college or bagged a phenomenal offer) while the prices of items in general have doubled thanks to inflation.

The purchasing power of the most impulsive purchasers have only gone down if you consider this particular section.

IT is relatively stagnant. Other core industries like automobile manufacturing companies( big names, I tell you) offer 12k( relatively high, trust me) a month in 2020 with a 2 year bond. Forget cars, people in non-IT and non- finance companies live hand to mouth literally i.e if you manage to get a job in the first place.

Most of us here complain about the price rise cause they can't get their favourite car/brand. A lot of people, who have graduated from engineering colleges would be glad to have 3 proper meals a day.

I know I'm making depressing statements here but unless MSMEs are given incentives to scale up and grow, the overall car sales will continue to remain stagnant. There's a serious lack of jobs and that is a big problem considering the amount of young people in the country.

[svsantosh]

The 'Car' to the average Indian can be imagined as what a small 2/4 seater aircraft is to the 'Indian you' reading this post. You surely have a electronic device and internet to view this, most likely own a car, own a house, kids go to decent private school, you have one or more vacations (domestic at least) every year.

But have you imagined owning a aircraft, a small Cessna, costs around 1.5Cr (or lesser for used ones) and throw around 5-10 lacs for using it 2-3 times a year (fuel, pilot-on-hire or self flying, insurance, oil change etc etc).

Imagined - Yes; Possible - Of course No!

This is how the average Indian who doesnt have a car (or own a house, struggles for private schooling, swipes credit cards at private hospitals; But owns a modern 2 wheeler sees the 'Car' as.

It is SIMPLE NOT POSSIBLE for the people outside the 2,50,000 Registrations (refer O/P) to become part of the statistic.

Will they eventually become a part?

Government policies, Macro and Micro conditions, World politics and economics and a good 4-5 years of copious monsoon may decide.

[Technic90]

Originally Posted by FlashMustang

So, even to keep the number of new registrations flat, it requires a lot more new buyers. To even make this happen, there's a need to increase wealth creation and percolation of benefits to a larger population. With the exception of China, I did not see an upward trend in some of the countries I checked out.

Cheers!

You compared India with developed economies, rather compare with other emerging markets like China, South East Asia and Africa. It makes sense for a developed country to stagnate in certain areas but it's no excuse for India to stagnate like that especially being an emerging market plus having more than a billion people.

Originally Posted by ruzbehxyz

Here in India, we absolutely have very less choices for actual good cars. Firstly we need to rise above Maruti.

The amount of taxes need to be reduced to make cars more affordable.

Most of the foreign car makers do not want to enter due to Government policies and those that are already there, do not want to introduce their lower models because of monopoly in India.

Government does not want to relax the policies because they want to protect Indian companies like Maruti, Tata, Mahindra etc. Whereas you could actually get a more better foreign vehicle in the same cost of a Tata or Mahindra.

First things first, the sales did not stagnate because of lack of foreign companies.

1. Why should anyone rise above Maruti? If foreign car makers provide same reliability and peace of mind as Maruti, people won't mind buying one. For many people, it's better to own a vehicle with poor safety ratings than own one which requires constant trips to service centres and big repair bills after the warranty expires. Not to mention the breakdowns in the middle of the road.

2. Korean twins have done pretty well up to C-SUV segments. Toyota has done well in MUV and SUV segment. Honda has been doing good in sedan space. These are foreign companies.

3. Europeans haven't set the sales chart on fire simply because a smooth engine and good ride quality doesn't help beyond a certain point. For you, that might be the better car but for many what matters is fuss-free ownership. Skoda Rapid undercuts it's competitors and is definitely VFM but still does not lead the charts simply because Skoda service and reliability isn't as good as any of its competitor.

4. Foreign companies have done well in lower models when they newly released Kwid, Magnite, Kiger, Figo etc. But eventually, they don't even come close to Maruti in ownership and the sales tumble down when people realise that. Just last week my colleague's Kwid brokedown in the middle of the highway due to clutch issue, he had recently given it for servicing. Now he's thinking of selling it and buying a Maruti.

5. You are right about many cars being better than Maruti, TATA and Mahindra at the same price point and that's why Alturas, SX4, S-cross, Ciaz, XUV 300, TUV, Harrier, Tigor and few others from their lineup don't dominate the sales. Some of them flopped horribly while some are usually 3rd or 4th in the segment. A nice car like Nexon has fewer sales than Venue.

6. GM closed shop, not because of government policies but because they provided a horrible ownership experience. Ford is in a similar situation in spite of being in India for around 2 decades and look where Hyundai is today compared to Ford. Both are foreign companies.

7. There is no government policy tilted towards a particular car maker or country of origin as long as they are being manufactured or at least assembled in India. The problem is there is no STABLE policy in this country which discourages foreign car makers to take risk. When Toyota set up their diesel engine plant in 2016-17, Supreme Court banned diesel vehicles temporarily in NCR and later changed registration rules and then the government announced jump to BS6 directly from BS4. Honda had also come up with their new diesel engine for City around the same time. All their business models and predictions went for a toss. You never know when the government will increase tax further or come up with any random policy. So that's why instead of risking on a new platform, engine or production line, Toyota found the best way of collaborating with Maruti with rebadged cars and shared platform in future.

8. The huge taxes on personal vehicles in a country with a sad public transport system make the new cars more unaffordable than before. Also import duty on certain raw materials to protect local suppliers increase input costs. Instead, the government should see why certain industries like steel producers are not as efficient and cost-effective as China and work towards that but the easy thing to do is raise import duty to make Chinese steel costlier than Indian steel. So new car prices are going out of reach in every segment. So people are forced to look out for used ones or continue with their existing old vehicle.

9. Local ones - Maruti, TATA and Mahindra have to survive in India irrespective of all the risks and policies as they do not have a market (or have a weak one) in other countries. Foreign companies can afford to give India a miss unless conditions are favourable to them. But even if policies turn favourable tomorrow doesn't mean foreign car makers will flourish with just long list of features and good price point.

[AZT]

Originally Posted by Turbohead

Another reason which I believe is missed out: Fresher salaries have been stagnant for the past 10 years(unless you are the very few who have graduated from a reputed college or bagged a phenomenal offer) while the prices of items in general have doubled thanks to inflation.

One of my cousins was a director at Accenture and a few years back I remember him commenting there's barely any difference in the salary he had joined at in ~ 2002 and what freshers from engg are being picked up at now.

[bordeaux]

IMHO, very high taxes combined with absolutely lame offerings by the car manufacturers are few reasons for this. To add fuel to fire, the cars haven't really advanced in the last decade. I drive a 2009 Honda City. The different between that car and current generation model is just Bluetooth, GPS and redesigned fenders and lights. I can easily punch a segment up but where's the value for money? Every car has got the same dumb 110-150 bhp engine. That's hardly an upgrade in terms of power to weight ratio. To satisfy my hunger to drive better cars, we rent good cars when on road trips in the west.

[nick.cs]

Another interesting thing to notice here. What i have done is plotted exports + sales which would approximate for total production and this is what i got.




So it seems that production capacity has increased and correspondingly utilisation also increased from 2002-2012 but it seems that absolute car production in the country has also stagnated after that.

Considering the overall portfolio of cars have increased for all players, this would surely mean that the total capacity is presently under-utilised. One thing to note here is there'll be replacement - considering that MG bought GM plant in Halol so net effect will not move the needle much.

[shibujp]

Shouldn't the metric be the percentage increase of the total number right of cars on the road? Or thr per capita increase in number of cars?

Because a car has a life of at least 15-20 years and while the number of new cars bought may have stagnated it still means that the total number of cars on the roads is increasing every year. Also we need to keep in mind that unlike the West the motorcycle is very much a commuters vehicle in India and definitely satisfy the need of people looking for personal transportation.

[rageshgr]

Nice point. But cars per year is half the story. We need to see revenue profit etc. because one may see that people r buying costlier and costlier cars. Also price hike. A few years ago alto was best selling. Now it’s swift. And that is the sales part of it

Even if buying is constant the service and parts industry will thrive and become bigger because its recurring and cumulative

[TrackDay]

A lot of factors come into play here :

• We are one of the Worlds largest two wheelers markets. That coupled with inadequate parking infrastructure and lack of proper roads, people are not really motivated into upgrading into cars. In countries like the US one can find huge parking lots, be it supermarkets or Hospitals and good roads and expressways. In such a scenario, adoption of vehicles is much easier.
  
• Another factor is fuel prices. This is also another reason why some folks don't use their cars that often and are happy to take their two wheeler to work.
  
• Lack of car culture is another strong factor. Only a very few of us must have had grandparents who owned cars and most of it is likely to be something similar to the ambassador. Even today a basic car like an alto is a thing of luxury for most folks.
  
• Being independent at a young age since in the west, high schoolers go for part time jobs and a car is a must. If not high school, definitely college goers will get one & so ownership starts out at age 16 or 18. Compared to that in India, if one were to buy a car independently it would definitely be at a much later age than that.
  
• I wont blame the lack of interesting/exciting cars. Even if those were available at cheap prices, there is simply not the road or place to enjoy them. Not everyone has the time to take the car out for a weekend spin or drive on the highway just for the sake of enjoying the car.

[SchrödingersCar]

A lot of focus was there on the "Per Capita GDP" increase stats but I was a bit surprised no one brought up "Median Income". For obvious reasons of inequitable wealth distribution (1% vs 99 %), the majority of the wealth is concentrated in the hands of the few.
Tried to find trend data for last 10 years, but laziness beat me after a couple of google pages.

Quoting from this article

The average annual per capita income of households interviewed in the LASI survey conducted in 2017-18 is ₹44,901. This is just about 39% of the per capita income in the same year according to the National Account Statistics

This implies that even though the per capita income and GDP has increased, the # of people with car purchasing power has not, at the same rate.

My theory is that the car buying class has not really seen an increase due to the average increments in entry level jobs being in line or lower compared to Inflation.
If there has been any increase, it has been offset to a large extent by increase in consumerism. People prefer to have the latest iPhone or dine out regularly at premium joints than save up for a car, house or rainy day. The concept of savings and investments also seems to have taken a hit, helped in part by this government's constant onslaught on investment interest rates.

And the other factor making this not so simple when comparing against 1-st world countries is the prevalence of 2 wheelers, along the high Fuel Prices, Road Tax, Insurance and maintenance costs. These might have been lower, if not for corruption and all the NPAs the banks are saddled with. If only....

BTW, the annual car sale numbers not growing that fast is a boon in disguise. Most of our infra specially in big cities (roads, parking, toll booths) is not being upgraded to be able to support larger number of cars. Until that happens, I would rather selfishly say that this is not that bad.

End of rant.

[vsrikkanth]

Without a doubt, govt policies are squarely to blame among other reasons associated with a developing, low per capita income economy.

The message coming out of taxation on cars in this country is clearly one of "Car is a sinned good". The government does not levy tax but penalties to completely defeat the economic case of buying a car.

Case in point: Myself. I bought my Carnival through corporate lease last year. Only then I realized that on a base price of 19.5 lacs, our govt levies 10 lacs as GST plus Cess. This is not including 3.5 lacs of road tax levied by the state. That's close to 75% of the factory price. For the same price, one can buy 2 Kia Carnivals in the US.

Such levies are regressive and what you call in desi language as, if you cut open the belly of a golden eggs laying goose, it won't last eggs anymore, it will die. That's exactly what is happening in India....

[pkk077]

Originally Posted by bordeaux

IMHO, very high taxes combined with absolutely lame offerings by the car manufacturers are few reasons for this.

High taxes is the cause, lame offerings its effect. A fully loaded international spec version will simply be out of reach of the target public because of taxation.

Originally Posted by vsrikkanth

Such levies are regressive and what you call in desi language as, if you cut open the belly of a golden eggs laying goose, it won't last eggs anymore, it will die.

The govt. does not care. If enough autos don't sell, they will tax something else. Worst case they will raise direct income taxes. The only escape golden goose has is to fly away to foreign shores.

[Tucker48]

According to a report by Nikkei-Asia, India has surpassed Japan to become the third largest auto market as per preliminary results.

Total sales for calendar year 2022

India : 4.25 million
Japan : 4.2 million