[RootedCosmo]

Everyone here have pointed down the obvious for not buying a new car and here are few points I want to chime in from my perspective.

1. People who had bought their cars in BS4 era especially great diesels ( 1.5 TDCI, 1.5 TDI, 2.0TDI, 1.3 Multijet ) are not getting their bang for bucks in the current scenario. All the lovely diesels are gone for one reason or another. These Turbo Petrols no matter how addictive they are to drive, they burn a hole in your pocket. Plus added headache of DPF clogging issues and 10 year ban on diesels are turning people away from this fuel choice.
Only Hybrid options are there from Toyota and Maruti stable and people who want value choices from other manufacturers are being forced to settle down on NA petrol which again is facing the nonsensical issue of Ethanol blending

2. I for instance have become so scared seeing the amount of road rage in Bangalore that I fear driving past sundown now. When in purchased my car 7 years my and wife used to go on night drives, now that become zero. There is no point investing in new car and face the wrath of hooligans on the streets.

3. The disparity on the road tax and registrations. With the advent of social media and people getting to know about price disparity amongst state, its disheartening to part away from your hard earned money when you know folks in other folks are paying significantly lesser amount for the same car. E.g: Hycross top-end in UP will be 32-33L On Road compared to 40L in Bangalore. Our roads are no way better than roads of some major UP cities

4. The rampant layoffs in IT industry and salary stagnation had made people conscious about their spending habits. My friends who used to go on frequent roads, take luxury vacations are being pretty conservative now and they have also planned to drag their 12 year car for another 2-3 years.

5. And Lastly, no car in 10-20 Lakh segment doesn't give you value for money and peace of mind like how it used to be a decade back. Engines are downsized, all gizmos are warranting frequent service center visits and rising fuel costs are no way justifying spending 20L+ and carry the baggage. When economically you are hit, travel, fuel costs and big ticket purchases takes a back seat

[kvamshi04]

Why are India's Car Sales Dropping? | Vantage with Palki Sharma

https://youtu.be/O6XXgNoV_bg?si=Afn95a8zTe7fCgew

[for_cars1]

A rather simple reason could be that the middle class pool of car buyers already have purchased (out of necessity, passion or whatever reason) a car and in our country people tend to hold on to their cars for a longer duration.

Just because the automobile industry has ramped production doesn't mean that the buyer pool will dump their existing (and perfectly usable) cars and buy new ones. Obviously they will not just sell their existing cars for a pittance and buy a new one when a new one is not required in the first place.
This could explain the slower sales.

Also sales will tend to have a cyclical pattern with highs and lows.

Over a longer horizon, the sales of cars will only continue to increase steadily in our market for the simple reason that the overall percentage of people owning cars is miniscule compared to the more saturated markets overseas, so there is lot of scope for more percentage of (especially middle class) people buying cars in the time to come.

Sadly taxation is very harsh in our country and greatly affects purchasing power among the middle class. Pay direct taxes at source and then from the already taxed amount, pay indirect taxes on everything, so the middle class are essentially double taxed.
Hope better sense prevails and there is some rationalization/no-double-taxation for the small percent of middle class salaried folks who actually pay the bulk of direct taxes.
Let them atleast provide depreciation benefits on cars to the salaried folks. Then the car sales will sky rocket and economy will boom.

[BusCar]

I disagree with the findings/conclusion of the article.
Reasons are as below:
1. The people who bought budget cars a decade earlier are now upgrading to Higher budget cars - This is evident from Monthly Sales data thread by Moderator 'Aditya' as well as Average selling price thread by member 'pqr'.
2. This has resulted in much higher availability of Used Cars - I recall that we had a thread with data that 'Maruti True value' has sales data that makes it top 5 OEMs by sales volume
3. I know some people who are relatives/acquaintance, who have brought there First car as a Used/Preowned car - Good to learn on it, Lower cost of buying, One gets know how of cars and accessories, Learn Driving - Then as budget permits, then buy new one
4. It makes sense to buy Used Car if usage/running is low

Yes there is inventory increase as per News articles and hence discounts are there on New Cars to maintain sales.

[Karthik.guru]

I love this topic!
As someone treading the line between being a millennial and gen Z, who is in the market for a new car, and who also happens to work in the development and public policy sector, I have a lot to say!

1. Cars are expensive. Full stop. They were always a luxury item and their prices have only gone up. Enough people have spoken about it here so I won't get into it. I am currently looking for a car only because I want a safer car for my parents. If it wasn't for their 600km trips to our hometown, I would've preferred just holding on to our Micra (over 200,000km done!)

2. Income inequality in India is the highest it has been in 100 years! Segment wise sales figures reflect this perfectly well. Sales of hatchbacks and entry level cars have more or less remained stagnant, 2 wheeler sales have declined, but sales of higher end cars has grown drastically. For whatever reason, the government denies this inequality and claims that poverty has reduced from ~40% to single digit figures. A closer look will tell you that these figures are misleading since the very definition of poverty was changed a few years ago and may be the biggest contributor to these impressive figures.

3. Job security is a luxury. Unless working in a government job or working in a bank, there is no real job security, and all my peers understand this really well. Unless earning several lakhs a month, we have to be very careful about big purchases or long term commitments. Combined with the general economic slowdown and news of an overdue recession, people are keeping a very tight grip on their money.

4. Taxation is now insane. Deductions for 80C have not kept up with price increases, the new tax brackets don't really help either. And with the cuts in corporate taxes, the middle class now bears the weight of being the highest contributor to the country's kitty. This is just about income tax. Buying cars just means paying more taxes, road tax, GST, toll taxes and taxes on fuel. It would've been okay if people got a return on this investment, but we have no healthcare, unemployment benefits or any other social safety net of any sort. Don't get me wrong, I totally understand and support contributing for public welfare, but why does a large corporation get to pay a lower percentage of their income than I do? (admittedly finance and economics is not my area of expertise, happy to hear your thoughts!)

Now some anecdotal experiences and opinions !

5. Driving is not fun anymore. Traffic is intense, road rage is raging, and cars are not as fun as they used to be. In recent memory, only the Jimny, Slavia and the MG Comet caught my attention. Sadly the Jimny and Slavia were too expensive and I had no use for the Comet (I work from home).

6. Driving is expensive! Fuel is the most expensive it has ever been, parking costs 100s of rupees anywhere we go and toll roads within cities have now become a commonplace. In most cases, a cab or auto is cheaper and more convenient.

7. We are more environmentally conscious. This may not be as common a factor, but based on anecdotal experience my generation is fairly cognisant of climate change and goes out of their way to be more environmentally friendly. Be it for genuine care for the planet or because it is the current social expectation, either way, we care for the environment!

I'm not really sure where all this is leading towards to be honest. Maybe a huge price correction, maybe the entry level segment slims down to just a few players, maybe a revolution? who knows ! Our politicians certainly don't!

P.S. - happy to share links of articles and research papers about inequality and the poverty index in case anyone is interested !

[Mystic]

There is a difference between middle class and middle income. I think the OP started with alarming inventory levels and the automotive journalists started predicting and coming up with various speculations. I think India is slowly trying to copy the USA wrt automobiles. In west there is a huge automotive lobby and they somehow create a market to sell the new cars. When I was in USA 2.5 decades back, I remember getting a Nissan Sentra for $ 99 per month with no down payment. Such is the mass production of automobiles and they will do anything to sell their stock. Also, the credit mentality now is slowly catching up in India like in USA. People are taking huge loans they cannot afford to buy SUVs for social status.

As Bhargava rightly pointed out, small cars is the key for India. We donot need big gas guzzlers as India is not an OPEC country and gas is very costly but we need to embrace KEI cars and change our attitude towards them. The future of EV is not clear with Government and the Industry changing their predictions and strategies on the fly confusing the consumers.

Below news which clarifies the alarming inventory levels which actually should not bother the end consumers like us but due to information overload, we get caught in the confusion unknowingly.

https://www.business-standard.com/co...2700450_1.html https://www.business-standard.com/am...2700450_1.html

[shresan23]

I would say it is the personal tax system that is most taxing on a family where there is only one breadwinner. Think about all the deductions, that are still capped at amounts that are relevant to, i dont know, 1980s?

Even now, you can claim only 100rs as education allowance per child for a month. 100? Of course there is 80C but that is capped at 1.5L, for most middle class people, 3/4th is taken up by PF and the rest by home loan principal (if any). The benefit, is practically non existent.

That was just an example. The main problem here is that we are taxed too much for too little. I get it, infrastructure needs prior investment, but it is also taking too long. Is there a stand on the future tax rates? Nope.

In that case, with all the taxes on taxes and the car taxes, owning a brand new car is next to impossible. People either buy a second hand car, work a bit on it and call it a day. Seems more cheaper than a brand new car.

Why would you spend 7L on a brand new grand i10 nios with next to nothing inside, instead of a better and more premium car that is lightly used and has a plethora of features?

I would say the biggest reason is that the taxes havent caught up with the rates in the market.

[Chisels121]

Originally Posted by amit1agrawal

. My friend brought XUV 5OO for 17L on-road in 2017. Now XUV 7OO for similar variant costs double the amount. If I extrapolate to future, when my current car is due for replacement in another 10 years, I will have to shell out 45-50L. It would simply be unaffordable for me considering I would be very close to retirement! I am sure other salaried people would be in same boat as me.
Car companies have to be realistic on their pricing strategy else there won't be many takers.

Sorry Sir but you are putting a misleading statement there. No variant of XUV700 costs 34L

[Renaissance Man]

Originally Posted by Chisels121

Sorry Sir but you are putting a misleading statement there. No variant of XUV700 costs 34L

Prices in BLR and Mumbai are quite high due to road tax. So if you take extended warranty and AMC package the price will surely cross 34L in these cities.

See the screenshot from Carwale.

[pedrolourenco]

It's good that people are not buying cars. Everyone in India want's to move out of their villages to bigger cities and towns. This is putting a burden on the infrastructure. Everywhere there are traffic jams and parking issues.
Even in a small place like Goa there are traffic jams and parking issues. Post covid this problem has become really bad due to a lot of people coming here.
There has to a reduction in sales.

[Sk8r]

Originally Posted by pedrolourenco

It's good that people are not buying cars. Everyone in India want's to move out of their villages to bigger cities and towns

Very few people will be blessed with ancestral/inherited wealth to ensure they stay back in smaller towns/villages eating up their family wealth or looking over their family business and not move to cities in search of better life.

This is putting a burden on the infrastructure. Everywhere there are traffic jams and parking issues.

Sorry, lack of public transport, lack of governance, corruption, lack of vision, red tape are few of the reasons why there are traffic jams and parking issues.

Even in a small place like Goa there are traffic jams and parking issues. Post covid this problem has become really bad due to a lot of people coming here.

What's stopping the government from providing e-passes and control the inflow of traffic/tourism? ( Hint : The people of Goa who have vested interests in tourism )

There has to a reduction in sales.

Again I disagree, for people owning more than 1 vehicle, it's a privilege to state this. For others, it's just a mode of transport in a country which cares zilch about public transport

[rakesh_r]

Originally Posted by Renaissance Man

Prices in BLR and Mumbai are quite high due to road tax. So if you take extended warranty and AMC package the price will surely cross 34L in these cities.

See the screenshot from Carwale.

5 Lacs, thats day light robbery!!

[somersault]

Originally Posted by amolathalye

Hi All ,

This is very interesting topic for all car lovers. It's evident that we all will have even tougher time in near future when the Bharat Stage 7 is introduced in 2025 as that may increase car prices further more. In view of this , is this the right time to replace your aging car or go for the upgrade.

Every new car launch will increase the cost of ownership to us. Somehow in India, its happening at quite an astronomical rate. As per my experience, it depends on the answers to the following questions.

1. Is your current car old? - Do you see the need to upgrade in near future? For me 7+ years car will be considered old.

2. What is your aspiration for new car type? An upgrade of type, size and engine or similar to what you are running now? If an upgrade then plan efficiently and financially but do not wait much longer if the car is old. This is because facelifts, new models and upgrades will keep on coming and so do the congested roads. in order to enjoy the new car experience, better purchase earlier than later.

3. What is your current age? If you are closer to retirement or salary/ income stagnation, better avoid new car purchase and hold current car for longer time.

[xcentrk]

Been thinking about replacing my 10 year old xcent for last 1 year. When I bought Xcent in 2014, it was the VFM choice and jack of all trades and master of none.

But now, I don't feel VFM in any new cars. Even checking out used cars since last few months, and it is really hard to come across a clean car or a decently priced ones. If I come across one, it is already booked or discussions happening with multiple persons.

What I planned in the end? Keep it as long as I can. Yeah, my car needs some repairs but that cost me 70k but with that repair, the car would be as good as new.

Next major thing is, taxes! Taxes on cars is exorbitant. Everything is taxed. Income is taxed, fuel is taxed, even food is taxed and what not. After all this, there is very little to save and with all this taxes, it is really hard to even think about buying new car and so falling into another EMI trap.

Finally, traffic and driving discipline. God, I hate to drive in traffic. I changed my office timings from 11am to 8pm due to changing traffic condition in my city. But since I have my own business I can do this, but not possible for office goers.

With all this, why would one buy an highly taxed depreciating asset?

[kushagra452]

Originally Posted by RootedCosmo

4. The rampant layoffs in IT industry and salary stagnation had made people conscious about their spending habits. My friends who used to go on frequent roads, take luxury vacations are being pretty conservative now and they have also planned to drag their 12 year car for another 2-3 years.

Apologies for the off topic reply. However, I was under the impression that salaries in IT/Tech are booming. As per the posts on Grapevine and X (Twitter) almost every other person working in tech seems to getting a fat pay package these days.

Have read about AI/ML techies with 5-10 yrs work ex getting Rs.1 Crs+ packages in Bengaluru? I was under the impression that FAANG employees earn north of Rs.1 Crs in India.