India's metros are surprisingly seeing drastic drops in car sales
What's the story
Metro cities in India have seen an unexpected but welcome trend. After continuously rising for years, the number of cars sold in Mumbai and Bengaluru actually dropped, and drastically. In Mumbai, it fell a whopping 20%, reports TOI. In Bengaluru, the second largest car market in India, it fell 11%. Delhi saw a marginal growth of 1.6%. So what's causing this sudden change?
Internet
Rise of the mobile apps
A prime factor is the "rising trend of shared mobility through platforms like Ola and Uber," says Rakesh Srivastava, Director (Sales & Marketing), Hyundai India, which makes more financial sense than buying a car. Combine that with the ease of online shopping, and people no longer need to move out of the house as much. Many are even selling their second cars.
Infrastructure
Crumbling infrastructure and improved public transportation taking a toll
"The other key factor is rapidly-growing metro transportation. People prefer to take the metro than driving and getting stuck in jams," Srivastava says. Rajesh Goel, Director (Sales and Marketing), Honda Cars India, agrees, saying congestion in bigger cities has hit demand of cars hard. Parking has become a major hassle. Many times, people have to park kilometers away from their destination due to lack of space.
Social change
The changing preferences of the younger generation
Several studies have shown that the key for millennials is not ownership, but access and convenience, and so they would substitute buying a car with a cab-ride and spend on leisure and luxury instead. Many are struggling under rising costs of living, which makes using Ola/Uber easier. Moreover, they are more conscious about health, and a growing tendency is to ditch cars altogether.
Others
GST also played a major role
Adding to these is the fact that even Ola and Uber are registering less growth in their fleet as they've reduced driver incentives, thus demotivating operators from buying new cars. According to N Raja, Deputy MD, Toyota Kirloskar, GST played a role. "Fleet sales dropped nearly 50% in 2017 as compared to 2016, primarily due to initial implementation issues with the GST."
flip
But then there's a flip side
All these have led to a drop in major metropolitan car markets in India. But on the contrary, the market in smaller cities, where aspirations for a personal car are at a high, is growing, Goel says. In fact, sales in Lucknow went up 25% last year. Ahmedabad, Chandigarh and Jaipur also grew 15%, while Kochi expanded by 7%.