[Vishal.R]

I fail to see significant decline in sales numbers, also in last couple of years, there were no discounts and still sales were keep increasing. Now discounts have started to reach pre covid level. Also would be difficult to define "middle class". Yes there was a time when entry level Alto was number one in sales, and today its mostly cars costing around 10 lacs, but that alone can't be use to conclude that middle class is not buying cars like earlier. Cars like Punch, Wagon R even Ertiga can be also be considered middle class looking at engine capacity (Punch) or build quality (Ertiga).

[ksaurabh21]

Prices have increased at a fast pace over last 4 to 5 years in automobile as well real estate sector whereas salaries have remained more or less stagnant.
At the same time, our finance ministry has been quite innovative in increasing the tax burden e.g. introducing tax on epf, increasing LTCG, doing away with indexation benefits, etc.
As a middle class person, I feel now I need a larger corpus than what I had planned earlier for an uneventful retired life. Which translates to holding on to my old car for longer duration than to give-in to the itch of upgrading for better features.

[sri_tesla]

Originally Posted by Sk8r

How could we ?

Even after paying so much tax, what do we get in return?

Attachment 2646685

Correct me if I am wrong, but aren't these taxes same as it was almost a decade back before GST? Except for a few states that increased road taxes in this time frame, I think the tax % on cars is the same as during VAT and custom duty era. In a nutshell, for smaller cars it's ~30% and for bigger cars its ~50%.

The major difference is that car prices and the market moved upward drastically post-pandemic resulting in huge profits for the automakers. For example, Maruti's sales volume in FY24 was only 10% higher than in FY18 but their profits almost doubled. It's the same with 2-wheelers. Hero FY24 sales are down around 40% compared to FY18 but their profits stayed the same due to huge increases in prices and margins. Taxes on 2-wheelers are the same as it was in FY18.

Another main issue is not just the car prices. It's the prices of all other necessary items like rent, food, etc... which went up rapidly in the last few years. Even in cities like Hyderabad which used to be relatively more affordable compared to Mumbai and Bangalore, rents went up by 70 to 80% in just 2-3 years. Land prices, flat prices, and rents all grew absurdly.

[Ad_J]

A week ago, I went to a mall where I saw many unsold Hyundai cars parked in the basement. Judging by the amount of dust these cars had accumulated, it was clearly evident that they had been sitting there for quite a while. Just for the sake of fun, I contacted four Hyundai dealers available in the city to enquire about waiting periods on Creta, Venue, Exter and i20 respectively. The response I got was in the range of 2-6 months.

The point being, I find it hard as in what to believe. On one hand, I see reports of car brands having huge inventory and discounts running everywhere, and on the other hand, I see reports of the number of cars being sold, which I think don't show any devastating deviation month by month.

On one hand, I see unsold inventory parked in a basement, meanwhile on the other, I see brand new ScorpioNs, Cretas, Thars, Nexons, Punchs running on roads.

The only section of people for whom cars might have become expensive to buy/own are the ones in the wage group who had their eyes on the Alto, Kwid and Espresso as their first car or an upgrade from their modest two-wheeler. These are the people whose ability to own a vehicle is hampered the most.

[somersault]

I am happy that someone was able to raise this issue again. I agree with most of the points mentioned in the discussion. That there are 2 India now, one with a very fast growth in the net worth and income. Second set is a one and unfortunately a large section in our country who has stagnant or no growth, loss of income and other stuffs.

Personally from my experience, my average spend per month has increased dramatically in the last 2-3 years, not because i am spending on more items but actually the cost has risen. e.g. School fees, my medicines (which go up by 10% each year by default), the hotel expenses and ridiculously high flight expenses.

It is now cheaper to travel as tourist and survive in a foreign land than India for some of us. Having said that, the price of the cars have rises astronomically. People are now saying that a 30 lakh car is a super deal in India. Contrary to general perception that the inflation in India is 6% and hence its ok to increase the cost of the car by 6%. We tend to forget that in a manufacturing environment, more you are manufacturing or sourcing a type of material, more you can expect a discount on the raw material. This is because of the cost of the scale and there is no further research, quality control cost associated with the material or product. Cost of the man power in manufacturing is not much compared to cost of the raw material and other related items. So a team of 100 can manage a plant making a significant production if automated.

In short, I see the car prices rising at a very high pace because of the greed of the manufacturers (exception to few who are dependent on foreign supply etc).

Besides, the government taxes must reduce. We have not seen any major growth in car sales or in general the overall country export if you compare a trend of 10-15 years.

Remember, if the cost is reduced, then the sales will increase. So more revenue. If Government takes the majority of the revenue, its their duty to reduce taxes to increase the sales and hence move up the economy.

My 2 cents

[Ameya_G]

Driving in general has become a chore and no longer an activity which brings joy. I have almost completely given up taking driving vacations and take flights to most of the destinations and take Uber or local auto for travelling inside the city.

Roads in MH are so horrible that even a thought of taking the car out for a long drive makes me shudder. If I didn't have a car, I would surely not buy one in haste today.

[TheStoryweaver]

As a millennial, I find driving in the city tiresome. It’s no longer a pleasure as it used to be. I started driving 10 years ago and used to love it. I still do, but if given the chance to use an alternative, I would happily choose it.

My priority now is to reach my destination with as little hassle as possible, rather than driving a personal vehicle for convenience.

Traffic has quadrupled in recent years as more people have shifted to driving cars instead of using public transport post-COVID. In my city, we used to commute to school via buses, but now I see the majority of parents dropping their children off at school in personal cars.

In my observation, several factors have contributed to the increase in car sales in recent years: pent-up demand, new car buyers, and the need to replace aging vehicles. Companies took advantage of this and significantly increased car prices, yet sales didn’t drop as much.

Now, as demand is decreasing, the previous level of supply has created a scenario of high unsold inventory and a slowdown in the market. This is a necessary correction, much needed to bring car prices down.

There are plenty of arguments about economics on forums when analyzing car sales. However, I often find that crucial points regarding market corrections are missing. Demand cannot remain constant at all times; there have to be fluctuations.

I also question some aspects of market slowdown. I won’t deny its existence, but I have noticed a rise in the standard of living in recent years.

I remember when we bought our first car in 2011; the entire city was driving hatchbacks and a few sedans. Swift, Alto, i10, and i20 were the most common cars in households. Today, the majority of cars in my city are crossovers and SUVs. Recently, a relative who visited India after nine years asked me how it is that so many cars here are now SUVs and larger vehicles.

There are plenty of factors to consider when reaching a conclusion, which I feel are often overlooked when discussing economics in the short term.

[TheStoryweaver]

Originally Posted by somersault

We have not seen any major growth in car sales or in general the overall country export if you compare a trend of 10-15 years.

Automotive sector recorded highest car sales in history highlighting a growth of more than 12-13% Year on year. If you are implying something else please do elaborate

Link - https://www.business-standard.com/am...0800125_1.html

[adityaNview]

I agree with most of the points stated above. Personally, I feel like adding these points:
A) Cars were a luxury in the past but are now more of a necessity. Especially in places like Raipur, where I come from, there is no public transportation available. And because the city is scattered far and wide, even services like Ola consume a lot of time and money. This should increase the new car sales but it’s not. One reason is that the used car market has grown exponentially in the last couple of years. With every new car, we, as a family, now consider buying a second hand car as well so that the cost can be managed.
B) A couple of Years back, buying a BMW or a Merc, would have meant making a statement. Now, I am not so sure. People have started valuing experiences and who you are as a person more than what you drive.
C) Because of 10 Year NGT rule, and others like them, the trickle down effect has allowed many middle class buyers to buy Luxury vehicles at a fraction of the cost. Case in point, we had bought a used Superb MT at 5.5 Lakhs instead of a New Wagon R for our use. We recently also purchased a 2016 Merc E250 Diesel Automatic, clean car with 38000 Kms in the odometer for 11 Lakhs instead of a new sedan.
D) Personally, I am a responsible driver, but I used to love driving without being constantly monitored. I understand that it is the need of the hour, but because of so many cameras and speed limits, the era of carefree driving ( please do not read it as reckless) has ended. I prefer being driven more than I had like to admit.
PS : Did not mean to offend anyone.

[t2k4]

The following table summarizes the estimated distribution of India's population across various prosperity levels between 1990 and now:



The focus has been reducing poverty over the last 10-15 years.

The middle class expanded but got the financial squeeze, too.

A report comparing multiple decades, taking India and the US as examples, shows that housing inflation is 11x for India and 6x for the US. Some of this has to do with India's corruption. All the undisclosed monies go to land purchases, inflating an already stressed resource.

India is a taxed country. If you fall in the top tier as a salaried person - you're paying 30%+ on the top line, between 5-28% on all consumption, 12-odd percent for liquor, and an insane amount on car purchase -- all as taxes.

I would like to believe this has helped bring tons of people out of poverty. See the chart above. No one loves paying taxes. Given that you can neither cheat death nor taxes, you might as well look at the positives of your contribution to improving the lives of others. What else are you going to do?

[hsaxena]

The world is going through a dynamic shift post pandemic, the ripples of which are felt in every aspect of our day to day life. You are an employee, your expectations of productivity are at least 2x for the same role now that you have AI tools like ChatGPT, Claude et al. at your disposal. You drive to work, you have 2x the traffic since lockdowns eased post pandemic. You fly back home, the airports see more than ever traffic with people lining up at lounges that were once exclusive. You plan a trip in India, the total cost of the trip would easily be comparable to a much better location outside of India. This is also reflected in an all time high Stock markets (which do not have a corresponding all time high balance sheets for companies), an all time high real estate prices and eye-watering rentals.

All of this to say that this is not exclusive to India, every other big corporate hub in the world is facing the same issue. But the thing unique to India is that we are still majorly a services based economy compared to a manufacturing based one. We are at a greater risk of disruption with automation and AI tools. There is a general distrust in the economy, and cars, by the way of taxation in India, are still a luxury. You pay anywhere between 30-50% of the total cost and get a sub-standard product (compared to the same models sold in other markets), and end up driving on tolled roads with potholes and bumper to bumper traffic. Jaywalkers, people not following lanes and traffic rules in general just add up to spoiling the experience of driving with a peace of mind. I wouldn't use a car in a big city for my daily use, and even if I have no other option, I would prefer going for a smaller vehicle to save 15-20K monthly on EMIs and get a driver to be driven to work.

Originally Posted by sri_tesla

The major difference is that car prices and the market moved upward drastically post-pandemic resulting in huge profits for the automakers. For example, Maruti's sales volume in FY24 was only 10% higher than in FY18 but their profits almost doubled. It's the same with 2-wheelers. Hero FY24 sales are down around 40% compared to FY18 but their profits stayed the same due to huge increases in prices and margins. Taxes on 2-wheelers are the same as it was in FY18.

This is an eye-opener, apart from the government that is not providing the infra to justify the taxes on private vehicles, the manufacturers' greed also adds to the bloated car prices. Do you have a source for these numbers? Would be interesting to read that.

[Tensor]

I have a different take on this one, since I’m pursuing computer science engineering as of now, the placements that most students get are really less/low majority of the companies say ~90% offer a meagre salary of 20-30k per month although the CTC looks decent for a fresher most of the CTC component will be junk and the in hand will be extremely less and on top of that they have bonds of 2-3 years.
This was completely different a few years back where most people would get decent salaries.
(bonds are a type of agreement where an employee must work for a minimum number years before switching or quitting else pay a hefty amount of money to the company)

and this is for computer science engineering students who apply for software development roles from a tier 1 college imagine the conditions in lower tier colleges and other branches where placements are non existent.
Even for experienced folks hikes are not happening as they used to in software field where one could easily switch from 5 lpa to 15 lpa in a matter of 2-3 years.

The issue why this is slowing down is because most people even with engineering degrees take home less than 5-6 lakhs a year without any significant hikes for a long period of time, this especially happened right after the covid/AI boom during the initial chatGPT days.

Companies realised most of the entry/fresher level work can be achieved by LLMs + over supply of engineers for a role = pay comical amounts of money for freshers as they don’t have any other choice.

This trend is likely to continue as LLMs gets better each year we just need less number of fresher/juniors in software industry. I might not be surprised if one day a few years from now LLMs take up most of the boring/repetitive jobs and senior level devs take up tasks such as decisions and designs etc.

Inventory of not just cars but people who want jobs are increasing (pun intended ) than even before.

[somersault]

Originally Posted by TheStoryweaver

Automotive sector recorded highest car sales in history highlighting a growth of more than 12-13% Year on year. If you are implying something else please do elaborate

Link - https://www.business-standard.com/am...0800125_1.html

With the GDP growth of 7+ % average and net direct tax growth by 17.7% last year and the consistent growth for so many years, we should have doubled the number of cars in 10-12 years. But it is more or less flat. Do not look for just one or 2 years trend. As you can see in the image, the PVs are increasing but CV, 2W and 3W are falling in domestic market. This implies 2 strata of income group, one growing and one falling.

https://www.siam.in/statistics.aspx?...8&pgidtrail=14

[Beastyerza]

I think the situation is much more complex than it appears. While income level is rising for everyone, not everyone is experiencing it at the same pace. For example, someone in the top 1% income group gets his income doubled much faster than rest 9% of the top 10% and the same goes for lower income levels further below.

It is evident in manners of car purchase as well, while the demand for Creta and others is rising rapidly, Alto and other entry level cars are not selling that fast, simply because Alto's Target customers are not getting salary hikes as quickly as Creta's target customers.

In simple words there is a sea of difference between lower middle, middle middle and upper middle class people and the speed at which their income rises, and this is reflected in the car purchase pattern.

[mack.mehul]

I think this is simply because of high rate of inflation prevalent in our country. Look at the prices of basic food items & oil that we use daily. Their prices have almost doubled since after covid. Couple that with incomes not rising and also with the fact that cars are getting expensive day by day. If at present a person has a budget of Rs. 5 lacs to buy a car, there are not many options only either Kwid or alto and that too the basic model without A/c and the essential features.

Secondly i think the fuel prices. With the prevalent rate of crude oil in international market, the government is committing atrocity by selling fuel at Rs. 90-100 per litre (as per the city). The fuel prices in india are in the high range if compared to other countries.