[Imran.Syed]

Read this on Business Standard today:

https://www.business-standard.com/ar...2000775_1.html

Maruti Suzuki India Chairman R C Bhargava on Monday at a media interaction said that even with the number of cars per 1,000 population projected to grow by three to five per year, India would still take 140 years to draw level with China.

In the past five years, car penetration on average grew by a mere one per 1,000 population, especially with the closure of plants and disruption of sales during the pandemic.
The key drivers for the car industry’s sluggish growth — and consequently penetration — are twofold: high taxation and higher cost of regulatory compliance, especially for small cars.
Bhargava pointed out that currently, the penetration ratio in India is 30 cars per 1,000 population, as opposed to China’s 221 cars per 1,000 population.

“Based on this calculation, we will take around 140 years,” he said.
The message clear: the Indian car market is not growing as fast as it ought to. He said the low penetration is reflected in a torpid passenger car market. “In the first decade of this century (2000-2010), the passenger car market grew at around 10-12 per cent per annum. In the next 12 years, the average growth was a mere 3-4 per cent.”

Unlike other developed countries like Germany that build their manufacturing prowess on the strength of their automotive (auto) industry, India, he said, continues to be dismissive of cars as a product of luxury.
“Government policies are such that they treat cars as luxury products that need to be heavily taxed,” he lamented, adding, “Car affordability is not at all related to income.”
“Taxation on cars in Japan is 10 per cent; in Europe, 19 per cent. Apart from the goods and services tax (GST), cess, state taxes, and a one-time road tax, the tax incidence in India is anywhere from 40 per cent to as high as 60 per cent for premium sport utility vehicles. It’s a call the government has to take,” he said.

At present, four-wheelers are taxed at 28 per cent GST, with additional cess ranging between 1 per cent and 22 per cent, depending upon the type of vehicle.
Cars imported as completely-built units attract Customs duty ranging between 60 per cent and 100 per cent, depending upon engine size and cost, insurance and freight value being less or above $40,000.
He said the cost of regulatory compliance (implementing Bharat Stage VI norms, for instance), especially on smaller and cheaper cars, has been going up. While the cost of doing so is similar for both versions, the impact as a percentage of cost is far higher on a smaller car.
As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive.

For instance, the market share of a Rs 5 lakh and below car has fallen from 25.8 per cent in 2018-19 to a meagre 10.3 per cent in 2021-22. In the same period, the market for cars of Rs 7 lakh and below fell from 60 per cent to 43 per cent.

Bhargava also took a contrarian view on India’s decision to go in for free trade agreements (FTAs) with different countries — a move strongly resisted by many auto companies that feared the absence of tariff barriers opening the floodgates to imported vehicles entering the country.

“My view is not accepted by many in the industry. But I believe our cost of production is very competitive compared to any country in the world. I believe we should aggressively go for FTAs so that car companies in India can enter these markets and increase exports,” he said.
On safety, Bhargava pointed out that adding safety features will not suffice. The lack of training for drivers and the ease with which licences are procured are bigger areas of concern that need a relook.

Moreover, there is no regulatory requirement that warrants checking the health and maintenance of a car after it rolls off the assembly line, he observed.

Maruti being the largest shareholder of the Indian car market, his comments do point a realistic picture of the business environment right now. Although the article and his views are not completely unbiased, I feel the changes he want in the taxation laws will help expand the market as a whole and not just one player in it.
And I completely agree about his views on safety issues and corruption in our RTOs.

[Jeroen]

Well, without putting dampness on this, I think all countries, including India need to rethink what they want strategically with car ownership. I mean you would not expect anything else from somebody making a fat cat salary, bonus and most likely share incentives, but the real question should India aspire to have the same ratio of cars to people as China or any other country.

I understand that owning a car is hugely important in India for a number of reasons. But at the same time, India like many other countries, including all western countries, have huge car related problems. So to me, this needs to be a more balanced approach to the overall transportation needs of a country.

We currently own six cars and yet, whenever we need to travel to places such as Amsterdam, Utrecht and Rotterdam we might opt for public transportation. We have a very good connection by means of bus, waterbus/ferry and train. Although as we live out in the sticks, we need to rely on either a bicycle or car to get us to the nearest bus/treinstation about 8 km from our home.

We have a special railroad subscription that gets off 40% discount on off peak hours. Very relaxed, convenient and cheap.

There is a trend in many western countries where people who live in major cities simply don’t own a car anymore, or participate in car sharing schemes.

Never ever listen to an industry expert as he or she will have way to much self interest to take a real holistic view. You would expect politicians to take such a helicopter view. Unfortunately, most politicians when it comes to long term thinking don’t do much better than your typical second hand sales guy/girl.

Jeroen

[vinya_jag]

This is like - the Ministry of Coal India projecting a 200% growth by the year 1935.
India, specially cities and towns should have reverse targets. Reducing the car footprint per capita in the next 20 years. Rapid mass transport and public infrastructure needs to be prioritised. I am sure, Maruti, Tata and Mahindra will not find it hard to pivot and start producing Mini buses and electric infrastructure.

We should instead be competing with China on these numbers

Found this on a cycling website https://discerningcyclist.com/how-ma...cles-in-world/

Is there scope for increased car penetration in the new age India? Maybe yes, when towns and smaller cities grow richer. But this could also mean replacing some of City car populace with rural car population.

[anjan_c2007]

He is talking about car penetration ratio per thousand being dismal at 30:1000 people vis-a-vis China at 221:1000. His wish or DZire is that this should be much higher. The key drivers for the car industry’s sluggish growth according to the 88 year old CEO are twofold: high taxation and higher cost of regulatory compliance, especially for small cars.

Coming to car penetration, our city and metro infrastructures are already overburdened and on the brink of collapse. The AQI is worrisome, getting from bad to unimaginable. The CEO does not talk about beefing up public transport as he could be fired instantly with orders from Japan, though he had joined in the early 1980's on orders from New Delhi.

The CEO is also criticising the newer norms that require cars to be cleaner and safer. Upgradation to BS VI and safety norms for smaller cars were always under criticism by him. He was and is too content selling unsafe cars. Even now many of his tiny cars score ONE STAR during NCAP crash tests.

The only point from the CEO that is well taken is the statement about taxation on cars which is a sore point for buyers. The government wants the cars to be as safe as the ones exported abroad, dictating norms. But the government does not realise that cars exported by manufacturers from India are to many countries where taxes are lower and where purchasing powers of their respective currencies are higher.

Why else would a Suzuki Swift sold in the UK and made in Romania score FIVE STARS even a decade ago? The same car sold here in 2022 comes with a ONE STAR, NCAP safety rating.

[srini1785]

I'm confused.

The subject line says "40 years" while the article here says 140 years:

https://timesofindia.indiatimes.com/...w/96384456.cms

Either ways, I don't think it matters.

He's known for his old age related ailments

[extreme_torque]

Originally Posted by vinya_jag

We should instead be competing with China on these numbers
Attachment 2392607
Found this on a cycling website https://discerningcyclist.com/how-ma...cles-in-world/

To me it sounds like a poor excuse because they arent mutually exclusive. The top country in your list, Netherlands has a car density of 588 cars per 1000 of the population - almost thrice the already high, by our standards, China.

Even if we are to take bicycling seriously, where is the infrastructure? Even in the big urban Indian cities, cycling infrastructure either completely absent or barely there at all. It is nowhere in the priority list of any, state of central, government either.

That aside, our weather is tropical, most cities highly polluted and our traffic is not the most civilised either, i'd call it dangerous infact- hardly the perfect place to cycle then.

And you cannot ignore the cultural aspect too - cycling is still a poor man's transport, most 5 star hotels would not even allow you entry if you turned up on a bicycle (happened to a friend of mine).

A car is an aspirational purchase for most of us. For us it is a sign of success and that you have made it in life. What if I was to reverse the question - How many of us would sell our cars and move to cycling?

[diwakarmuthu]

This is a myopic view coming from an industry veteran. One needs to consider the industry shifts that we are seeing today especially with car ownership and sharing. We are likely to see new business models that will propel car ownership moving forward keeping in mind the already burdened infrastructure, higher cost of ownership and climate actions.

It would have been heartening if he had talked about public infrastructure and last mile connectivity that will help in reducing the infrastructure overload.

As a customer, I am willing to pay a premium for a safe car. As one member has pointed out, cars that are imported out of India eventually score 4 stars or more as mandated by the respective authorities. With such volumes for Dzire, I don't see why with a marginal increase a safe car can't be produced.

[fiat_tarun]

India's auto growth story was to come from car ownership growing from 30/1000 to around 100 or 200 / 1000 Indians, but we have to accept we just do not have the infrastructure to handle so many vehicles, especially in urban settings.

The government has also realised this and will not make it easier to own a personal car. We cannot compare our market with China. For perspective, the drop in sales in a bad year in China (25 million to 21 million) is the whole India market (~4 million !).

I agree with Mr. Bhargava's statement that the industry cannot really grow with such high taxation but that is a reality we have to live with. I expect moderate growth to reach around 6-7 million by 2030 and that's where we will be.

[VKumar]

India: 30 cars per thousand
China: 221 cars per thousand

Going by the population density we have, where will we park those cars or where will we drive them in our cities the day we have even 100 cars per thousand?

Solution for India is not increasing the penetration to 200 cars per thousand, the solution is better infra and better public transport. The kind of goals we have set for carbon neutrality etc, we need to put an upper threshold on the total number of vehicles on the roads and hence focus more on the density of passengers per vehicle instead of vehicles per 1000 population.

In my city, which is probably 10% as much crowded as Delhi or Mumbai, I would never want 221 cars per thousand population, if you have an innovative idea of accommodating sustaining and efficiently using 6000 cars per sq kilometer in Mumbai or 3000 cars per sq kilometer in Delhi, please share it with me too. the calculation is based on population density of the above mentioned mega cities, so mind it that it includes the forest area too, and that makes the situation worse for thickly populated residential area.

[Kosfactor]

Making it difficult for those who have never had a car to be able to upgrade from a motorcycle is not good , I agree with Bhargava.

Government should reduce tax on small cars and make them cheaper to buy, it will certainly help the economy as building a car provides employment to so many people.

Increasing number of cars is not a problem, the urban infrastructure will catch up, its all part of a normal process in developing countries - nothing to be alarmed about.

[beingsidd]

looks like Maruti & Toyota were expecting a reduction in GST % for hybrid cars which did not happen. Hence, this outrage.

[superbad]

With the current ratio of 30 cars per 1000 people causing chaotic traffic jams & overcrowding in cities, i shudder to think what a ratio of 100+ cars / 1000 people will do to our cities, towns & villages where the road infrastructure is not even that good. Maybe it's a good thing that car penetration is low. Our roads simply cannot handle anything more.
I may be sounding highly selfish seeing as i myself own a car but I also pay taxes in the highest tax bracket & don't have the facility of any reservations or concessions handed out to me.

[charanreddy]

As expected from Mr. RC. Could he also care to consider India’s population density and road infrastructure vs China’s ?

Our urban Centers are in need of proper planning and creating satellite townships. With out evolution of our this, more cars will mean more pain.

To be honest even the public transportation is crumbling in the big cities due to high density. Density is not a problem in itself, lack of proper planning is.

Also this statement is a bit of a clash of interest coming from an auto manufacturer and needs to be taken with a pinch of salt.

[gauravdgr8]

Originally Posted by Imran.Syed

Although the article and his views are not completely unbiased, I feel the changes he want in the taxation laws will help expand the market as a whole and not just one player in it

The question to ask is, assuming for the Vitara Hybrid, the government reduces the tax from 28% to 12%, which would translate to a reduction in cost by atleast 1,50,000 , would Maruti pass on that cost benefit to the customer?

We all know it's a big NO.

All these talks are only because they are unable to increase prices further and fill their pockets. Another quarter or two recessionary effects would start kicking in India and that's why he is worried. Comparing the last decade on a lower baseline is not the correct approach.

[McLaren_P1]

In Pune for example, already often the roads are jam-packed with vehicles, moving often at a snail’s pace. No gap between cars - all stuck to one-another. More cars will only make this worse. More cars is a terrible idea for many Indian cities.

Either we need a dramatic urban road infrastructure upgrade to accommodate more cars - wider roads, flyovers, less intersections and more roundabouts (which I believe our states probably can’t afford or want prioritize). Or we as a country, really need to make public transport more accessible, safe and comfortable for all.