December 11

Has Government killed the Golden Goose with 4 Meters Rule in Car Industry?

So, I thought we'll discuss it here. Have we reached a crescendo? Is 250K cars a month the max we'll ever reach? If yes, why have we peaked at this number? If not, why are we stuck at this number for the past decade?

The answer is some harsh policies by the Government and the laidback attitude of the brands. Both parties are not willing to let their share go; Government with taxes and Brands with fat profits.

 

There's surely very large potential in the Indian car market. The last year was a disaster though, but the demand has picked up at a rapid pace post lockdown. I believe the market will grow even more if the atrocious taxes are reduced so that lower-middle-class people can actually think about getting a car. A car buyer is seen as a cash cow in this country, name anything about the car and you have to pay it through the nose. Vehicle taxation rules are in dire need of a change. The less I say about the rising fuel prices the better.

 

I also think the government needs to do away with that absurd sub - 4-meter vehicle tax benefit rule.

We've been denied so many good cars from international manufacturers and being served all these lame hatchbacks.


Possible Reasons
  1. 1
    Income level on the ground has stayed in line with inflation meaning never additional income to buy cars,
  2. 2
    No culture of car lease in India which would have prompted many people to change cars regularly
  3. 3
    Financing options. Interest rates in developed countries in extremely low. My brother got a car loan at 1% in the US.
  4. 4
    Cost of living is actually high in India compared to other countries. Barring the US, education, medical, housing are unreasonably expensive in India.
  5. 5
    Many people use cars to show off and use it for a long time, like 60000km in 10 years sorts.
  6. 6
    Import duties, taxes on cars, etc have risen a lot. At 10L rupee car in 2010 costs 18L now with reduced features and quality. Income levels have not kept pace for a large population. 

So, in short, Government needs to sit and think to abolish the CESS on cars to give the automobile industry a much-needed push. It will result in bringing costs drastically down, encourage bigger global brands to invest in India and bring their global models here, it will generate more revenue because of the better cars, more revenue in service & repairs as well. EcoSystem eventually will be more profitable in the longer run. 


Description Source: Myself and Team-BHP

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