The government’s decision on Monday to reduce excise duties on cars, SUVs and MPVs across the board was so unprecedented that it has created a peculiar problem for the industry.
While the reduction in taxes was much needed and the industry had been lobbying hard for it over the last 6 months, the inventories piled up at with the dealers that were charged at the higher rate of duty is a headache for the manufacturers. And as the sales have been underwhelming over the last 7-8 months, unsold stocks are high both with the dealers as well as the companies’ own supply chain.
On an average, any car maker carries with itself an inventory of 2 weeks and in an ideal situation–10 days. But estimates suggest that currently the inventory level is at least 6 weeks and in some cases stretches to over 10 weeks. In effect, there are some companies where stocks dating back to 2013 are still unsold with the dealer.
On any given day, these cars are a problem and could be very difficult to liquidate. And in cases like this one, when taxes go down, it assumes significant financial implications. While the company and the dealer has paid a higher duty for the car as excise duty is charged at the factory gate, when it actually gets to the intended customer for delivery, the prices would change and customer would be obliged to pay the lower value. It is a situation that results in a windfall when excise duties go up but it turns into a loss to be absorbed when they go down.
Considering that around 150,000 cars are stuck as inventory across the country and the average ex-factory sticker price of a car is Rs 6 lakh (mind you it would include the marquee super cars as well), the entire industry is sitting at a potential loss of Rs 360 crore. This amount would either have to be absorbed by manufacturers entirely on their own, or in conjunction with their dealers. Or, some manufacturers could be inclined to pass on only part of the excise duty reduction to the consumers to account for the loss in inventory.
The peculiar problem is the reason most of the companies have gone into a huddle and were not able to decide by how much prices ought to be reduced. As a car buyer, if you were waiting for the budget you may now laugh your way to the bank at the expense of your manufacturer.
For the domestic automotive industry staring at a second straight annual decline in sales, the Auto Expo could not have come at a more appropriate time. The impact of the sundry concepts and launches on actual revival in demand may yet be notional but for motoring enthusiasts and scribes like us it has given good fodder to chew upon. Read more
With an estimated 70 new models and concept cars set to be unveiled – 15 of them for the first time globally – this year’s Auto Expo, which opens to public on February 7, couldn’t have come at a better time for the Indian auto industry. Read more
In the last 18 months, Osamu Suzuki, the chairman of Suzuki Motor Corporation that owns India’s largest car maker Maruti Suzuki India Ltd, has been a regular visitor to India. He makes it a point to attend almost all of company’s board meetings (around 6 every year), and is a routine visitor to the firm’s Annual General shareholder’s Meeting generally held in September. Read more
All the major car of the year awards for the year that has gone by have been divided between the Ford EcoSport and Grand i10. But who gets the coveted title of being the worst to hit the roads.
Between the four nominations for that title, it has been a sort of a photo finish this year. But lets start from the bottom. The candidate that is most undeserving of this crown is the Volkswagen Cross Polo. It received just 8 vote and though I put that name up among nominees, I would have myself been disappointed had it not been the fourth in the list.
Next in the line is the Mahindra Verito Vibe. Some existing owners of the car actually wrote stinkers for the blog post. Overall it received 22 votes and though I remain unconvinced about its strengths, perhaps it is not as bad as I had initially thought.
The top two obviously are the Chevrolet Enjoy and Maruti StingRay. And the Chevy beats the Maruti to the pole position by a margin of just 9 votes. There is little room to defend a vehicle like Enjoy. It is boxy, dated and lacks the quality levels one expects from a company like General Motors.
Like I had wished the last time, I sincerely hope there will not be a need for a blog like this in the new year. For now, congratulations to Chevy for making a car that benefits nobody in India. Not even themselves.
Its a three way fight between Honda Amaze, Ford EcoSport and Hyundai Grand i10 for the best car of 2013. There are juries dime a dozen to decide that. I wont join that league. What I would rather look at is the worst of the lot. Like I have done in the last 2 years.
Nobody talks about it, writes about it, thinks about it. But surely, in the dead heap of two dozen cars–big and small–launched in 2013, there are a few that are not worth the effort. And why do we need to look at them? Besides filling up space and giving you something to read about, to those unfortunate ones who do land up here, it will perhaps show some humble car manufacturer what kind of cars ought be made or launched in India.
What is heartening this year that except maybe a couple there werent any new cars that were specifically bad. Which goes to show that there is something that the manufacturers are doing right.
There are two ways to decide the nominees. One, based on where the product is at fault either in yours truly’s humble standards or when compared to those in its segment. The other is when despite being a good car, factors like price or cost of service and spares have relegated it to the margins.
Like in the past, those that figure in this list are not bad cars per se. They are only not as good as the others. With the disclaimer taken care of, lets get down to the business.
Its a little hard to imagine that a Volkswagen would ever make it to such a list. But that is exactly what I meant when i said there werent many outrightly ludicrous cars launched this year. The Cross finds itself here because it does not, bar some tacky cladding, offer anything beyond the existing Polo.
In Europe, this version comes with a higher ground clearance that gives it better versatality. We would have loved to have it here. Instead we are charged more for changes that are neither classy nor necessary. This is a result of a company trying to conceal an obvious dry product pipeline. We would have been better off without the Cross.
General Motors would want to forget 2013 in a hurry and that is not because its car features in this list. (I dont even think they care). They had two launches this year–Enjoy and Sail sedan– both have Chinese origins and both have their own set of problems.
But while the space and practicality saves the sedan, it could not rescue the Enjoy. Suspect build quality, tacky interiors, underpowered engines and lack of refinement are its myraid problems. And GM’s mess with the Tavera was so big that Enjoy could not even get a decent marketing push. This one, is a disaster and one of the prime contenders for the crown.
Like VW, another surprise here. A Maruti actually makes it to the list. And the fact that this was the sole launch from the company in 2013, proves what an underwhelming product it is. Basically a souped up version of the boxy Wagon R, the Stirngray does not bring anything new to the table.
And it is a mighty disappointment because there was so much that could have been done with the car. The projector headlamps and chrome garnish on the grille only makes it look even more ungainly. And uncool. And the tagline — my thing, everything–does not help either. The sting is clearly missing here.
Mahindra Verito Vibe
Such a list is not complete without the customary entry from either a Tata or a Mahindra. This year the toss up was between the Indica Vista D90 and the Vibe. The latter makes it for the loss of opportunity.
Given that Mahindra’s hands were tied due to its estranged partnership with Renault, the Vibe isn’t a bad product. Whats got my goat was the ridiculous boot lid.
Neither a proper small car nor a sedan, a notchback design would have done a world of good to the car. Instead it falls in the no man’s land.
I am still confused what to call it…a compact sedan or a hatchback, because it is none. Perhaps the market is as confused for only that can explain the lack of takers.
Rave and rant, post comments, fight, jostle….you are most welcome. Or abuse me at email@example.com. Want something else, vote on and let us boot one of these out. Let the mud slinging begin.
This year has been rather unforgettable for most in the domestic automobile industry. Sales have been sluggish, sentiment has been low, excitement lower and footfalls at showrooms the lowest. Read more
For a market that is one of the largest and fastest growing in the world, the performance of European car makers in India has been appalling. Read more
The Amaze maybe the best thing to have happened to Honda in the last 5 years and in the coming years there would be other more significant products to hit the roads but the City will always hold an important emotional position. Almost like first love. Read more
Its lack of sophistication, pedigree and power notwithstanding, the Maruti Gypsy was always a special vehicle. Launched in India back in December 1985 when there were more cows than cars on the road–especially the ones the Gypsy made its own– initially it had a 1 litre 4 cylinder petrol engine. And, was an automatic favourite with rallyists and off road aficionados. Read more