Millennials and the Car-Nation
The Indian economy is in the doldrums right now. Well, not in the geographical sense but in the metaphorical sense. The most prominent sector in the economy that is facing tough times is the automobile manufacturing sector.
Retail sales have been at an all time low for nearly 20 months with sales having come down by 16.8 per cent on a monthly basis and 10.8 per cent on a yearly basis. One could say that the automobile industry has been forced to hit the brakes.
Many manufacturers have demanded that the Centre give them some reprieve by reducing the GST levied on cars. There have been opinions against that as well.
In the midst of all this, Finance Minister Nirmala Sitharaman said that the industry was hurt in part due to millennials preferring to take an Ola or Uber rather than buying a car. Naturally, she received a fair share of brickbats and bouquets.
But, is the ‘millenial mindset’ really responsible for the slowdown?
Ola, Uber-like car renting services are largely limited to metros and in the best scenario to tier-II cities. On the contrary, the kind of sales slump experienced by leading automakers is spread across even rural India. On the topic of ride-sharing, This isn’t a new trend that is killing the new car market. Sales have been declining mainly since the last one year and in an alarming manner only in recent months, say last six months.
But what will be the excuse for a similar downtrend in the truck, tractor sales and even moped sales? Can the millennial mindset be blamed for dropping commercial vehicle sales too?
But it is important to pay attention to the exact words of the finance minister. Her exact words was that the millennial’s mindset was one of the reasons. She didn’t say it was the only reason.
So, can the “millennial mindset” be held responsible for slowing car sales at least in urban India?
With India moving ahead to Bharat Stage VI (BS-6) norms for emissions and mandating safety requirements in cars, costs have gone up by up to 15 per cent. Add to that the slow pace of infrastructure, lack of parking spaces, and congestion, it seems to be a significant reason.
It’s not just Uber and Ola that’s contributing to this, there are several other factors. Urban cities have seen the rise of bus aggregators such as Shuttl and ZipGo, rental services including ZoomCar, Myles and even manufacturers are offering such services. Hyundai’s Revv offers car subscription services in 19 cities across India. Add to this the fact that millennials tend to move cities more often the previous generation, why buy a car every time you shift?
As far as commercial vehicles go, the Centre had increased their carrying capacity by 25 per cent back in 2018. Add to this the redundancy of roadside checkposts in the GST-era, it now takes less time for trucks to finish their trips. Perhaps this could be a factor.
While Sitharaman has received her fair share of criticism and support for her views, the automobile industry might find a way out of its mess, thanks to Donald Trump.
The ongoing trade war between the United States and China has prompted two automobile manufacturers from Korea and Taiwan to look at investing in Chennai for their manufacturing needs.
Explore more on the UnFound App.
