CAIT Says There’s No Slowdown In Auto Sector: 7 Questions Auto Makers Need To Answer Right Now!

CAIT Says There's No Slowdown In Auto Sector: 7 Questions Auto Makers Need To Answer Right Now!
CAIT Says There’s No Slowdown In Auto Sector: 7 Questions Auto Makers Need To Answer Right Now!

Confederation of All India Traders (CAIT) the trader’s body said that there is no slow down in the Automobile sector and the industry is making hue and cry only to get a package from the government.

The auto industry sales decline can be affected by many factors like high GST rates, farm distress, stagnant wages and liquidity constraints.

No Slowdown In Automobile Sector

General Praveen Khandelwal, the CAIT Secretary said that “There is no slowdown in the domestic automobile sector. They are saying this to get a package from the government,”.

While referring to new vehicle launches he said that companies have received a huge number of bookings, which reflects no slow down in the sector.

Also while talking about the sales announced by e-commerce giant Amazon and Flipkart, he demanded a ban for these mega sales as such firms are violating Foreign Direct Investment (FDI) norms according to him.

He also informed that if the government does not take any actions then they will approach the court. He said that “these e-commerce companies are allowed to do B2B business but they are indulging in big advertisement campaign. These companies are not doing business, this is the business of valuation. They should give details of the top 10 vendors in the last five years,”. (reference)  

He also said interest rates are high in India and global firms get loans at a cheap rate.

As we all know that there is a fuss in the market about the automobile industry’s worst slowdown in history. However, the industry is constantly blaming this on consumer preferences, high GST and strict regulations on emissions.

Some Unanswered Questions?

The statement from CAIT drives some confusions regarding this decline in the auto industry.  As people say Rome was not built in a day.

Many questions are arising like why analysts couldn’t predict the future demands for this sector. Some of them are.

  1. Why frontline processes and people could not either see or report changes in customer behavior?  
  2. If they have reported then what actions taken by headquarters to resolve the situation?
  3. Do they monitor consumer’s behavior from the sales they generate to better predict their choices in the future?
  4. What does the data indicate from the past few months for buyers not completing car purchase? Does it show their decline because of high prices or vehicles not compatibility of BS-6 standards or they are waiting for better fuel options like electric car?
  5. Is there a possibility that car manufacturers have increased car prices remarkably and individual’s wages are not growing at the same pace becomes the reason for low turn up? 
  6. What feedback system car dealers have to analyzing consumer sentiments? Can they do geographical sales analysis for understanding the data?
  7. How do they deal with the lag between sales endpoint and reaching the data for analysis at the center. Are these systems are automatized enough to come to a clear conclusion efficiently?

These are just a few questions that rises when we think about the downfall in the auto industry. (reference)

Shashank Srivastava, Maruti Suzuki’s executive director marketing & sales informed that  “India’s ownership patterns had not really changed and people were still buying cars with an ‘aspirational aspect’. The Ola and Uber factor may not be strong to contribute to the current state of slowdown,”.

The industry is constantly insisting on cuts in GST taxes to the government. It seems like a good idea to them but the government is also going through a tax shortfall.

So far, carmakers have almost no choice but to deal with this decline by reducing prices and take a margin hit if necessary. But mostly it is affecting the resource count in the majority of the companies since these industry has seen huge layoffs in past months.

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