10 Reasons- Why Fewer People Buying Cars? – Free PDF Download

BHARAT STAGE VI

• There is uncertainty over future of BS-IV vehicles after India adopts BS-VI on April 1, 2020.
• So people are reluctant to buy BS-IV cars and thus huge inventory is left with manufacturers.

REGULATORY POLICIES

• Cost of cars is estimated to have risen 15% in past 9 months.
• It is mainly due to mandatory additions like airbag, reverse sensors, ABS and crash conformity standards.

FUEL PRICES

• Car & Fuel are complementary goods.
• Between August 2015 and August 2019 price of petrol has risen by 15%.
• Government raised excise duty on petrol and diesel by Re 1 during the 2019 Union Budget.

GDP SLOWDOWN

• India’s GDP growth slowed down to 5%, a 6-year low in the June quarter.
• Consumption collapsed to an 18-quarter low of 3.1%

CAR LOANS

• There is high interest rates, stricter security.
• Despite reductions in rates by the RBI over the past several months banks have not passed on the benefit to the end consumer.
• Further, banks have been extra vigilant in lending due to the high susceptibility of a default.

HIGH INSURANCE AND REGISTRATION COST

• Buyers now have to buy 3-year insurance instead of one year.
• Registration fees for vehicles was hiked by 13 times by the Centre. This however has been put off till June 2020

TAXATION

• In anticipation of a cut in the Goods and Services Tax (GST), existing cars buyers have held back their purchase.
• The auto industry has been seeking a cut in GST to 18% from 28%.

ELECTRIC VEHICLE POLICY

• The government’s sustained push for electric mobility has created doubts for buyers.
• Carmakers have promised to launch an affordable range of electric cars in the next 2-3 years.

SELF-DRIVE CAR MODULE

• Rise of self-drive car companies such as Zoomcar and Revv have also impacted new car sales.

MOTOR VEHICLES ACT

• Stricter rules for driving and penalties which have risen by 4 to 10 times compared to their previous levels have acted as a purchase deterrent.
• In Mumbai, wrongful parking attracts a fine of upto Rs23,000.

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