Maruti differs with Nirmala Sitharaman, says Ola, Uber not big factor in auto crisis

Finance minister Nirmala Sitharaman has said that millenials preferring taxi aggregators like Ola and Uber could be one of the reasons for the crisis in the auto sector. But India’s largest carmaker Maruti Suzuki has said that cab aggregators may not be a big factor in the slowdown.

Maruti Suzuki India’s Executive Director (Marketing and Sales) Shashank Srivastava told news agency PTI that the ownership pattern in India still has not changed and people purchase cars with an “aspirational aspect”. “The Ola and Uber factor may not be strong to contribute to the current state of slowdown,” Srivastava said

Sitharaman had said that some show that millennials prefer to take Ola, Uber rather than commit to an EMI (equated monthly installment).

The Maruti executive said the auto sector saw one of its best times during the surge of Ola and Uber and other cab aggregators. “Ola and Uber came into existence during last 6-7 years. In this period, the auto industry also saw some of its best times. So, what happened only during last few months that the downturn became so severe? I do not think it is only because of Ola and Uber,” Srivastava said.

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The auto industry which is undergoing one of its toughest times saw monthly passenger vehicle and car sales record steepest fall in August. Passenger vehicle sales plunged 31.57% year-on-year to 196,524 units in August while passenger car sales fell 41.09% to 115,957 units. This is the worst-ever fall for both the categories since Society of Indian Automobile Manufacturers (SIAM) started recording the data in 1997-98.

August was the 10th straight month that witnessed fall in car sales.Truck and bus sales dropped 39% while two-wheeler sales fell 22% to 1.5 million units.

Srivastava cited the US market which has seen robust auto sector in spite of Uber which is a big player there. “India, 46 per cent of the car buyers are first time users. 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,” he said.

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The finance minister has said the government is working on ways to deal with the situation and the goods and services (GST) Council will decide on cutting goods and services tax on automobiles, which attract a 28% rate now, at its meeting in Goa on September 20.

Maruti Suzuki had cuts its production in July by 25.15 per cent, making it the sixth month in a row when it reduced its output.

The carmaker had suspended production at its Gurugram and Manesar plants in Haryana for two days this month.

Ashok Leyland had also declared production holidays at its various plants across the country for the month of September. The plant at Chennai’s Ennore has gone for 16 days of non-working days, while the Pantnagar plant in Uttarakhand will stop production for 18 days.

(with PTI inputs)