Auto sector including Auto ancillary contributes 7.50% in the over all GDP, which makes it one of the major sector driving the economy. Most Auto manufacturers have planned shut down and reduction in capacity utilization, leading to uncertainty in job scenario in the sector which employees over 35 million people.
While Uncertainty over the BS-VI norms is a one of the main reasons of slag in auto sector. There are other factors too equally responsible for the struggle in the auto industry.
Fuel prices have been ever rising. The government has increased excise duty and cess on petrol and diesel in the budget. The new Motor Vehicle Act. which has come into force has hefty penalties for offenders, has created a fear among the general public that casual attitude towards traffic norms will not work anymore.
The overall sentiment of the economy, coupled with slow growth rate and poor job creation has lead to slower consumption in the economy and thus auto sector is one of the many victims of the slowdown.
However going back to the Fin Min's comment on the Millennial's mindset, has use of OLA & UBER caused slowdown in the auto sector! Definitely the slowdown in Commercial Vehicles can not be attributed to OLA & UBER. Though, as far as passenger vehicle sales are concerned which are currently having a downtrend for last 10 month straight, use of cab services do have some impact on sales. OLA operates in 169 cities, while on other hand UBER operates in 40 plus cities.
Now this preposition has created a Paradox. If Millennial are not buying cars and two wheelers does that mean there is enough Cab Services available in the market? and Does those cab services provider are buying cars? and if so why is such a steep fall in the demand if the cab service providers are increasing their foot print?
Practically out of 4000 cities and towns in India, a little over 175 cities are served by Cab Services. This exclude inter-city travel, which is mostly preferred by own vehicles.
Attributing only one factor to slowdown in auto sector, is a shallow assessment of the prevailing conditions. The Fin Min will need to look at other factors also to device an full proof strategy to revive the auto sector which is a major contributor to the economy.
The overall sentiment of the economy, coupled with slow growth rate and poor job creation has lead to slower consumption in the economy and thus auto sector is one of the many victims of the slowdown.
However going back to the Fin Min's comment on the Millennial's mindset, has use of OLA & UBER caused slowdown in the auto sector! Definitely the slowdown in Commercial Vehicles can not be attributed to OLA & UBER. Though, as far as passenger vehicle sales are concerned which are currently having a downtrend for last 10 month straight, use of cab services do have some impact on sales. OLA operates in 169 cities, while on other hand UBER operates in 40 plus cities.
Now this preposition has created a Paradox. If Millennial are not buying cars and two wheelers does that mean there is enough Cab Services available in the market? and Does those cab services provider are buying cars? and if so why is such a steep fall in the demand if the cab service providers are increasing their foot print?
Practically out of 4000 cities and towns in India, a little over 175 cities are served by Cab Services. This exclude inter-city travel, which is mostly preferred by own vehicles.
Attributing only one factor to slowdown in auto sector, is a shallow assessment of the prevailing conditions. The Fin Min will need to look at other factors also to device an full proof strategy to revive the auto sector which is a major contributor to the economy.
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