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FIAT India Sales

Discussion in 'Fiat India News' started by amogh, Feb 5, 2015.

  1. Raj_pol

    Raj_pol Superiore

    Messages:
    551
    Bangalore
    Punto Evo 1.3
    Contrary to popular belief most of the middle class buying folk take bank loans and do not have much to hide being taxed at source. Thus the rs 5 L to around 12 L market will be least impacted.

    The expensive cars coming through the CBU route or the CKD route might see some short term challenges. I am enjoying the demonetization move and i say three cheers to the same.
     
  2. prabhjot

    prabhjot Esperto

    Messages:
    2,902
    Location:
    delhi ncr
    Contrary to your belief: most tax-evasion (as opposed to legal tax avoidance, with by-design loopholes in the tax code and admin that enables legal legit 'white money' tax and other 'chori) is BY the so-called 'middle class', the largest part of which consists of small traders, the 'rich'er farmers, small property rentiers and brokers/flippers, petty industrialists/sme-owners and shopkeepers and commission agents, chemists, doctors, lawyers and CA-s, auto workshop owners, coach body builders, construction and building material suppliers, architects and consultant engineers etc etc.

    This section will on average suffer a great eroded wealth-effect, whether or not they have black 'money' (which is NOT at all the same as 'black cash' this last being a small part of the kaala 'dhan', held more in property, 'working' (or not! ;-)) capital in companies/partnership 'firms', gold, jewelry, etc.) Since their businesses are rogered over the next many-more-than 6 months (in profit/loss terms) and their property values have crashed and they in many cases face a liquidity crunch if not crisis/bankruptcy.

    This is just the effect via the cash/liquidity/money-supply contraction, there is the huge dampening effect due to the reign of 'tax terrorism' beginning to be being unleashed to consider too, which will dampen not just large-ticket consumption but indeed credit demand EVEN if interest rates fall a fair bit, EVEN among the so-called 'middle class', most of whom are not either govt employees or say IT sector employees.

    i.e., car sales will stay recessed for quite long, AND/OR will hugely crimp profitability of the as-it-is crisis situation of many dealers and service centres (across car firms and brands), as well as force car companies to engage in cut throat discounting/credit-extension etc that will lead to an aggravation of car industry losses (as it is only 3/4 firms are profitable in India, ex-exports.)

    Remember: the car industry has been in slowdown mode on many metrics almost continuously since 2012/13, with only MS and HY's new models plus the ola/uber low-margin, discounted cars selling better/well, and that too only recently (last one year or so).

    i.e., there is already a huge buildup of extreme financial stresses at dealership and service centre level, as also at firm level too (ex-exports).

    This de-re-monetization (which is a 'demonization of cash' as a means of short cut, short term boosting of near-bankrupt psu banks' lowcost deposits and thereby low cost funding/financing for the central govt's to-be increased deficit, among other more 'political' goals) will lead to a heavy further-slowdown for at least another year, net-net: financially-speaking. At least.

    Am happy too. As the stock market crashes further: expensive auto and autocomponents stocks will come much cheaper!

    JEEP may be ok, since it is (new Compass+the smaller b-suv) going to be more heavily localized and so presumably cost/price competitive, and export-centric. But, on the other hand, there's another hit: the terrible design of the gst (28%+luxury tax+states' compensation cess). IF it goes through, which it hopefully will fail to in this very warped form. Also: the crimping of dilli ncr's diesel sales due to the air quality (anti-diesel) crisis here.

    BUT: Fiat is absolutely dead in the water (come 2018, say) as a plausible, potentially profit-making market competitor against MS and HY, plus Mahindra, Tata and Renault-Datsun in a slow, cut-throat, weak-demand market. In such conditions only the biggest dominant firms will gain marketshare, by using their clout due to economies of scale they enjoy across the supplier as well as esp the distribution/service/financing value-chain.

    @Raj_pol
     
    Turbothinghy and amitshedha like this.
  3. kuppuraj.murugesan

    kuppuraj.murugesan Timido

    Messages:
    10
    Location:
    Bangalore, Erode
    Bangalore
    Fiat Enthusiast
    I don't think demonetization effect on Fiat cars. How many Fiat buyers are buying money in cash?
    99% of buyers are going loans.
    Even though Ford is selling less car, we can see some commitment from them. Reduction in Pricing, Service calculator and lot of CRM focus activities. Same from Renault also, Introduction new car and trying to do something.

    what is there with FIAT apart from winter service & summer service camps? Fiat don't want to do business in India.

    In Indian, people are not looking for engines, looking for designs, NEW CAR!!!
     
    vista7155 likes this.
  4. SwifttoPunto

    SwifttoPunto Amatore

    Messages:
    78
    Bangalore
    Punto Evo 1.3 90 HP
    I don't see any reason why demonitisation will have effect on Fiat sales. It certainly will have effect on Jeep sales. But November sales of 266 units puzzles. Yes of course due to some psychological uncertainty there will be some reduction for Nov & Dec, but should not be to this extent, when Maruti, TATA, Toyota, etc have positive numbers.
    On demonitisation there is no doubt in my mind about the long-lasting positive effect this is going to create for the economy. Short-term inconvenience for certain sections or geographies, short-term negative growth, etc, all are absolutely worth it. However knowing that the other side that is affected is so strong and influential, all these negative stories and opinions created in the media are understandable.
    On whole opposition parties going against this is also easily understandable as they have to maintain or earn political space when this kind of large activity is undertaken by ruling party.

    My expectation was that apart from Luxury brands, brands having presence in rural such as Maruti, Hyundai, Mahindra, Tata and Toyota also will have impact. But it has not happened or December month figures may give different picture.

    There will be resistance to change always, when it is such drastic change, affecting political players, influential section, etc., the resistance is much more stronger.
    --- Double Post Merged, Dec 8, 2016 ---
    Meanwhile seems to be some good news. I dont know how far it is true. But if Fiat launches Tipo in 2018 in the price range of S-cross then I have reason to change my vehicle eventhough I did not like interior much.
    http://gaadiwaadi.com/fiat-tipo-hatchback-india-launch-price-021440/
     
  5. Raj_pol

    Raj_pol Superiore

    Messages:
    551
    Bangalore
    Punto Evo 1.3
    266 cars this month. So this is what Fiat has come to but it is on expected trends. As an observer Fiat has been consistently doing the most hair brained things possible in India.

    1. Only 2 models which are now a decade old. Some recent changes have been better (like ditching the 67 BHP junk of a petrol engine) but it is too little too late.

    2. Very few dealers since there are very few models and theses models do not sell at all. When you sell 266 a month it is almost equivalent to not selling any.

    3. Ridiculous pricing for cars like the Grand Cherokee at 3 times the US pricing - they should understand that Jeep does not have the brand equity of the big 3 Germans or the more famous Italians. Folks might talk of the initial sell out but over a period of an year will they be able to sell at the same volumes - absolutely no.

    4. Planning for smaller cars, affordable Jeeps since eternity. The target is next year but let us see if it will hold. For once they should sell a good looking vehicle fully loaded to the hilt. Yes gadgets matter, yes looks matter, yes luxury seats matter and yes the music system matters. Most car buyers go from home to office with the occasional Sunday out of town trips. Very few skid around in hair pin bends everyday. So for them the off road capability is not so important.

    5. Safety - Fiat still does not have airbags in their base and mid variants. These things matter as far as image goes more than a bunch of Fanboys talking about built which cannot be objectively defined.

    At the end of the image image is everything in the modern world. Anyone who doubts that should look at the the recent president elect from USA.
     
    vista7155 likes this.
  6. prabhjot

    prabhjot Esperto

    Messages:
    2,902
    Location:
    delhi ncr
    @SwifttoPunto

    This represents no change other than a crunching of the money supply, inducing a precipitous decline in the 'velocity' of money, in transaction volumes, property-price crash, working-capital denial etc.

    The 'changes' you're referring to (remains to be seen) have no need for de/re-monetization: the means of widening the tax base, quelling gold imports, removing property-market speculation via cash etc etc have not-the-least need for de-monetization.

    They require tax reforms and other simple, focus, targetted measures, including a larger taxman cadre and special taxation courts/tribunals for quick and easy yet fair tax justice (as opposed to 'tax terrorism' or 'raid raj'.

    That way the transition to a smaller 'informal', a larger 'formal sector' sector occurs organically: like in every other developing and already-'developed' country in the world. It's been underway in india too since the eighties: 'cash' is only 22-24% of India's gdp, so 'cash'-ness is not out of line in any way relative to the development experiences of the west, of korea/japan/taiwan or Latin American developing countries, given the structure of the Indian economy. It is NOT rocket science, but for some reason the pretence in India by the govt is that we have a 'magic potion' albeit a bitter one!

    Since the means chosen are so blunt (not to mention ineffective and grossly inefficient) there WILL be longer-term wealth-and-demand destruction, and NOT only 'black'-wealth either. Even if sales rebound by end-2017 (unlikely imo) the margins-pressure, financial pain at various points in the value chain will be very high, in the auto industry.

    As for the patenting of the Tipo: fca did the same recently in Brazil. THAT is because the 'new Punto' and the 'new grand Sienna' will be very similar in their styling language (but not in platform and architecture nor in all powertrains) to it.

    imo That does not mean they'll be launching the 'new Tipo-like Punto' et al here come say 2018 or 2019. THAT decision is, i suspect, at best still wide open and delayed till after the Jeep Compass and b-suv launches? And i'd imagine hinges on Tata Motors adopting them as their own next-gen models to replace say the Bolt and Zest, given the inexistent rhd export demand for India-made Tipo-like 'new Punto' etc.
     
    amitshedha likes this.
  7. Turbothinghy

    Turbothinghy Esperto

    Messages:
    1,230
    Pune
    Punto Evo 1.3 90 HP
    Glad you brought this point. I feel this has been the biggest goal in the mind of our PM for bringing de-monetization, more so because the GST will start getting implemented from next year.
     
  8. SwifttoPunto

    SwifttoPunto Amatore

    Messages:
    78
    Bangalore
    Punto Evo 1.3 90 HP
    @prabhjot
    Well I prefer to stay away from this discussion in this forum, but as we already brought up some points let me mention my perspective.
    1. Any decision that a Government takes in a democracy can not be seperated from politics. It is not just in India but in any democratic set-up. Even where intention is good either the timing or the method or the mode will be politically motivated. How much politics involved is just anybody's guess.

    2. India's GDP calculation, growth calculation or for that matter any economic indices calculation is not representative of real picture when we have so much activity in unorganised sector and cash economy. Bringing these into proper organised and banking system are equally important. Co-operative societies and systems also not fully brought agri and other rural sectors into banking. Not just that estimation of cash % in GDP itself is questionable. Just to give a relevant example, used car sales. Against the level transactions that happen, are 50% get considered in economic activities? Again Gold is also another important item.

    3. Cash crunch is temporary. Effect on growth is also temporary. RBI and other major economic houses predicted 0.15 to 0.5 basis points reduction in growth and may be 1 to 2 basis in extreme. But once such a large money comes back to system it has to give a large push to the economic activity again. It can not idle. Even if people draw it back already digital payment mode has got sufficient push and 50 days is large enough for quite a number of people to partly adopt to such system. Like Nandan Nilekani said, what would have happened in 3-6 years will now happen in 3-6 six months. Whether is it enough? answer is no. Whether it will remove cash transactions? answer is no. But the push it got is significant.

    4. Purpose of demonitisation is certainly multifaceted and black money is only one of them. Black Money, Counterfeit currency, Terror and naxal funding, slow down of further black money creation, election funding due to this, psychological impact on corruption, cashless economy, bringing unorganised sector to organised, widening tax base, bringing real estate pricing to affordable level (I doubt), etc. etc.,
    This can achieve all these purpose partially or only marginally. But suggest me any one method that can achieve all these purpose in single, practical and such a time bond manner. Whether all the purposes achieved, I can give instances that show that yes it has touched upon all these points.

    5. Why it had to be done this way? 1. When we are doing something, ideally we should try to get all possible benefit out of this. When it was decided demonitisation, which is like once in 40-50 years event, why not try and remove all black money in the form of cash? (whether it happens or not is a different question). Otherwise it is not possible to address this part. Others can say there are ways, but absolutely there is no practical way that can achieve this level. For that matter, all these years we have seen there is no real measures that are taken. Laws will not be effective. 2. Why Govt had to highlight black money? otherwise no way Govt could get this level of public support. Like many people including Supreme Court said, if public support was not there there could have been havoc and large scale roits across the country.

    6. It caused great inconvenience. Certainly it caused inconvenience even Govt acknowledges that. But what extent? Is it to the extent media is highlighting? Absolutely not. To give some facts, yes in the initial stages there were large ques, mainly on account of exchange. The day Govt said they will put ink on fingures, that afternoon ques reduced to half. That day I went and withdrew some cash, cashier was pointing to couple of people (who looked like laborers) saying that daily they came multiple times for exchange. They were worried ink has been put. On previous day, when I was passing through another bank a person on a bike was collecting money from 4-5 people and discussing why a branch did not accept one of the persons id proof (again they looked like laborers). I am just trying to say, that rush was created by people who had to convert large money. We buy vegetables, they did not have much to complain, except first 2-3 days sales were down. We have maid, person who washes car, person supplies paper, shops I regularly visit, lady who collects garbage for our road daily, nobody affected to the extent they are highlighting. In my native which is remote village (my vehicle can not go near my house and in rainy season I have to park 1 km away in another village) and we have hardly 3/4 acre of arecanut farm, my parents did not face any problem, there was a small function that also they arranged without withdrawing cash. Not because they had so much cash, but they dont need cash on a daily basis as they dont visit shops daily and even when items bought they are bought on credit basis. All items for 3-4 months bought together. My father can not work so labourers come for even small agri works, they did not have issue. I checked few of my relatives in different villages, they are also ok. But yes there was a marriage, they faced some issue. except that not much. But yes I am not generalising there will be issues in different places based on the way of life.
    But what media showing is not true. Majority of agriculture is a seasonal and some effect will be there in those places where it is a season. But again transactions happen on credit except some products and places, everything wont happen on cash.

    7. On funding banks, there no banks at this stage that are under bankruptcy stage. NPA norms have been tightened, that is reflected in the increase in NPA and provisioning. It is good practice as this takes hit against profit and no way affects deposits. I can give detailed rationale these but simple answer is these funds can not be used for writing off NPAs as highinghted by some politicians. But of course funding of banking was required to further up the banking activities, lending, etc., which this activity serves very well.

    I can go on this further, but I agree to disagree if you different view and experience. My views can not changed as I am convinced on this move. I am not influenced by media because I dont believe them based on few specific instances I had seen. I am also not convinced by politicians who are opposing because we have seen their dramas enough (It does not mean I support Govt blindly, believe me, many people in ruling party are equally unhappy which is evident in the way they are talking or supporting the move). And economists, when previous PM said it is laundering and looting of public money and few more economists gave some absurd logic I realised how biased everyone is.

    But I am happy to listen to your views and experience, as you speak very direct.
    --- Double Post Merged, Dec 8, 2016 ---
    And one more point which you highlighted I agree is on middle class. Actually these people have to be mostly termed as higher middle class. Yes part of this higher middle class and richer class are the people who avoid taxes. No doubt on that. Believe me I dont mind mentioning a fully political point, majority of this class was assumed to be supporting current ruling party and they are going to lose their vote base. That is an important point which is why it requires a support from people to push further steps in right direction. If it fails believe me nobody in near future will dare to take any significant measures against corruption. Even majority of the Govt machinery will be against such moves.
     
    Last edited: Dec 8, 2016
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  9. Krunal Bhatt

    Krunal Bhatt Amatore

    Messages:
    149
    Location:
    Ahmedabad
    Ahmedabad
    Punto Evo 1.3
    From Fiat selling only 266 to government bashing, to effects(positive/negative) of Demonetization. We discussed everything but I think we all missed one simple point here. This figure, 266, refers to number of cars shipped/transported from FCA to Dealers.Not Dealers to customers.
    Following is what could be the reason for such a low number, IMO.
    FIAT dealers take around 5-6 months to clear the stock of cars manufactured in previous year. Which reduces their profit margin, because they have to offer huge discounts on them. (for example, in 2016 , dealer of Ahmedabad had few petrol PUNTO EVOs which were manufactured in 2014,and they were offering 1.5 lac plus discount on those cars).
    So, I think dealers are requesting lesser number of vehicles so that they dont have to worry about them in 2017.
     
  10. SwifttoPunto

    SwifttoPunto Amatore

    Messages:
    78
    Bangalore
    Punto Evo 1.3 90 HP
    @Krunal Bhatt
    Yes I agree on that point to some extent, but that should have happened even last year. Compared to last year there is 100% reduction. Dealers may be little more cautious due to demonitisation.
     

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