- Unlike macro economists, being a corporate guy i would like a micro approach
- whenever controls come in,industry ask for the govt to stay away from intrusion. But whenever demand slump comes in, the industry wants the govt to grant fiscal reliefs.
- Today the demand for passenger cars have declined with entry level cars suffering most. But two wheeler (https://www.statista.com/statistics/318023/two-wheeler-sales-in-india/)
- three wheelers (Hi-export here) are growing. (https://www.google.co.uk/amp/s/www.financialexpress.com/industry/auto-sales-on-track-3-wheelers-buck-the-trend-with-24-growth-in-fy-19/1546806/lite/)
- truck sales in Aug is showing a decline but until march it was fine.
- Second hand car market is increasing
A micro approach to strategy from a firm’s point of view
- As a strategy on a micro approach from a firm’s point of view( without blaming govt) they have to explore these
- Are their vehicle segment declining?
- A drill down of demand age wise/ income wise/ urban rural wise/ institution demand pattern can tell us the exact pain points
- If the pain points r out and see whether domestic demand is declining due to the structural changes say it may be.. Uber/ Metro/ better Railway facilities have changed the mindset of people to own cars, or the speculative gains of real estate sector off or black money parking off etc in the case of trucks waiting time at toll gates less due to GST or liquidity of NBFC affecting finance availability etc
- whether export growth is possible
- can there be price sensitive demand growth
- if not then can we lease partial facility to global players having firm export markets
- can we convert part of the facility into ancillary component making for global players with hi export market
- can we convert part of facility into a defense component manufacturing facility to reduce the idle capacity?
- can we quickly amend our facility to make electric cars with minimum investments? If so how? How soon?
Macro policy changesAfter that we go to go to govt for macro policy changes-
- GST drop
- Govt announcing capital subsidy for all vehicles above 20 years/ 15 years/ 10 years , who convert their vehicle into electric vehicle or environment friendly vehicle or atleast a dual oil and EV type?
- Govt may introduce phasing of the old vehicles first year capital subsidy for all govt vehicles, second year taxis and third year onward public and in 5 years > 20 year old goes off into EV. This can give a guaranteed demand of EVS to auto industry. Govt can also explore environment Cess to fund the transition to EVS with capital subsidies
To sum upThe govt can not solve all the industry problems. The industry has to strategically plan itself with a micro approach first. The govt can not go back to create jobless growth by once again creating speculative gains in the market such as real estate etc. It has to bring in genuine growth in the gdp. That means we should be prepared to accept a shake out in the economy. The govt can at best help a soft landing via fiscal concessions, capital subsidies for change over to environment friendly methods and so on.
God bless india in its bumpy ride towards 5 trillion $. Drdd