Politics

‘Small towns, rural to be hubs for car sales’

NEW DELHI: Growing congestion in metros and bigger cities will slow down car sales in the top markets as smaller towns and rural areas will become hubs for generating growth and new demand, R C Bhargava, chairman of the country’s largest carmaker Maruti Suzuki, said.
Speaking about the government’s push towards electric vehicles (EVs), Bhargava said the country is still unprepared to sell green cars in large numbers as they remain expensive and there is lack of adequate infrastructure support, such as battery manufacturing or charging points. The company’s pessimistic outlook on EVs has prompted it to go slow on green plans as it looks to sell e-WagonR (its first electric car) only to fleet buyers in the beginning, while looking at selling to private customers over the next two to three years.

As the country’s biggest automobile extravaganza (Auto Expo) kicks off at Greater Noida from Wednesday, the Maruti chairman expressed concerns over the inadequate infrastructure across many top cities, while also highlighting negative impact of high taxes on sales.
Sales in metros such as Delhi, Mumbai, Chennai and Bengaluru — among the top markets for the car industry — have been on a decline for the past few years, industry numbers showed, and it is increasingly getting difficult to generate incremental volumes from these markets.
Bhargava said building road infrastructure should be one of the key priorities for the government, especially as the auto industry plays a critical role in pushing manufacturing output of the country. “If the industry doesn’t grow, investments will slow down and so would the capacity of companies to create new jobs.”
Apart from congestion, demand in metros is also believed to have been hit by the growing popularity of shared mobility services (such as Ola and Uber) as well as rapidlydeveloping public infrastructure like metro train networks. The Maruti chairman said high taxes were bringing down growth prospects of the Indian car industry, keeping vehicles — especially entry ones — out of bounds for twowheeler owners and middleclass customers.
He said high registration taxes imposed by states and GST rate of the central government (that ranges between 28% for smaller cars and goes up to over 45% for bigger vehicles) have made cars unaffordable for a large section of buyers. “States look at cars as a means of raising revenues, and this impacts their affordability. Even the GST rates need to be re-looked at. I don’t have a confirmed study on this, but maybe it can come down to 18%.”
The slowdown in the Indian car market has prompted many car companies, including top makers such as Maruti and Hyundai, to go slow on new investments. Hyundai has already said it will not look at a new factory for two to three years, while Maruti has delayed production from a new manufacturing line at the Gujarat plant owned by its parent Suzuki.
The Maruti chairman said while the central government is working on plans to revive growth, there is a need to have long-term strategies rather than rolling out shortterm boosters. “More microlevel, longer term planning is required. The government needs to provide inputs, and the rest has to be done by the industry.” He said India’s target of reaching $5 trillion in GDP will face serious challenges if the auto industry does not grow strongly.

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