Maruti Suzuki says millennials’ preference for Uber, Ola not a ‘strong factor’ in auto sector crisis
The car maker’s executive director said a detailed study was needed before arriving at any conclusion for the slowdown.
Carmaker Maruti Suzuki on Wednesday said millennials preference for ride-hailing services such as Uber and Ola instead of buying cars may not be a strong factor for the major drop in the sales in the automobile industry, PTI reported.
Maruti Suzuki India’s Executive Director (Marketing and Sales) Shashank Srivastava told the news agency that the ownership pattern in the country had not changed, and people purchase cars with an “aspirational aspect”.
On Tuesday, Union Finance Minister Nirmala Sitharaman had said in Chennai: “The automobile and components industry has been affected by BS-VI and the mindsets of millennial, who now prefer to have Ola and Uber rather than committing to buying an automobile.” She had added that millennials do not seem to be inclined towards committing to EMIs for buying an automobile.
“The Ola and Uber factor may not be strong to contribute to the current state of slowdown,” Srivastava said. “I think we need to watch and study it more before arriving at such a conclusion.”
The executive director said Ola and Uber came into existence in the last six-seven years, and during those time the auto sector had witnessed some of its best times. “So, what happened only during last few months that the downturn became so severe?” Srivastava questioned. “I do not think it is only because of Ola and Uber.”
He also cited the example of United States market where Uber is an important player. Srivastava said the sales were robust despite their presence in the last few years.
“[In] India, 46% of the car buyers are first time users,” he explained. “It is an aspirational behaviour. People may use public transport like Ola and Uber to go to offices on weekdays, but still they buy a vehicle for the weekend outings with the family.”
“The pattern of ownership in India has not changed yet,” he added. “We have to watch on a longer period to see if there is a structural change in buying pattern.”
He attributed the current downturn in the auto sector sales to liquidity crunch, increased prices of products due to regulatory issues, higher taxes and rise in insurance rates.
Srivastava also criticised the slew of measures announced by the government to deal with the crisis. He said they were not sufficient as they benefit in only long term health of the industry and addressed the sentiments of the customers.
He, however, assured that the government knows the current situation and will take care of the economy.
On Wednesday, the Congress also hit out at Sitharaman on her millennial mindset comment. It said the statement reflected the “inefficiency, immaturity, and inexperience” of the Bharatiya Janata Party’s governance. Congress spokesperson and Rajya Sabha MP Abhishek Manu Singhvi said at a press conference that the finance minister’s statements were a “grave joke” on the current economic slowdown in the country.
Singhvi also made similar comments like Srivastava. He said the mobile app-based car booking systems had been around for almost a decade and had not emerged at once.
Former Union minister Jairam Ramesh quoted the Maruti-Suzuki Chairman RC Bhargava to dismiss the Ola-Uber theory for loss in sales. “FM blames Ola, Uber & millennials for slump in car sales. Chairman of Maruti Suzuki who knows better denies it,” he said in a tweet. “FM must recognise that slowdown is for real & across-the-board going far beyond only passenger cars. But in this era of ‘uber-nationalism’ anything goes”.
The Indian automobile industry is facing a crisis, with 15,000 jobs lost in the sector in the last quarter and almost 300 dealerships closed down in the last 18 months. The decline in consumer confidence, coupled with the crisis in non-banking finance companies, have caused a steep fall in passenger car sales.
Automobile sales declined for the 10th consecutive month in August as passenger vehicle sales fell 31.6% since the same month last year. This was the steepest decline in a month since the Society of Indian Automobile Manufacturers began compiling the data in 1997-’98.
On Monday, commercial vehicle manufacturer Ashok Leyland said seven of its facilities would have up to 18 non-working days this month because of continued weak demand for its products. Carmaker Maruti Suzuki last week decided to shut down operations at its plants in Gurugram and Manesar in Haryana on September 7 and September 9.
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