The Covid-19 pandemic has hit the automobile industry hard. Now, people involved with this industry are looking forward to revival and growth. While the Centre’s Scrappage Policy has given this industry a ray of hope, high taxes hinder growth. In an interview with Orissa POST, Shaunak Raj Parikh, Director of Utkal Automobiles Private Limited, talks about how the pandemic hit the automobile industry and what they plan to do ahead. Excerpts:
What impact did COVID-19 have on your business?
COVID-19 impacted all the stakeholders in the value chain, such as suppliers, OEMs, dealers/distributors, mobility & online players. The Indian automotive industry suffered losses worth more than Rs 2,300 crore per day during the prolonged lockdown period. Job loss in the sector is estimated to be about 3.45 lakh. Besides, 286 auto dealers had to shut shops. Revenue generation in Odisha dropped to 58% in motor vehicle tax collection in the first quarter of 2020. Impact on dealers was – blockage of working capital in BS-IV inventory, potential decline in BS-IV sales as it was expected to pick up in March, delay in production and availability of BS-VI models led to further decline, drop in automotive demand due to price increase for BS-VI transition.
What is your view on buying behaviour of customers in Odisha?
Consumer behaviour has been evolving. The number of visits to brick-and-mortar dealerships has dropped. Digital media is playing an increasingly important role in determining purchase decisions of customers. Consumers today are researching online before purchasing a vehicle, even in smaller cities and towns. Behaviour of customers in Odisha is digitally driven.
How would you differentiate Utkal Hyundai in terms of service? What do you offer the customers?
Our offers are always in line with Hyundai guidelines. Offers do change from month to month depending on a lot of factors like availability of stock, schemes offered by competitors etc.
Automobile industry is facing various problems. Demands have also muted. What should the govt do to help the auto industry?
Scrappage Policy: The Central government has been talking about the scrappage policy which I feel, if rolled out, will help generate demand.
High rate of taxation: Affordability has become one of the main hindrances in the growth of automobile sector in India. Prices have increased due to several factors like upgradation of safety and emission standards (Bharat Stage-VI emission norms), high rate of taxations like GST-28%, cess imposed on cars from 3% up to 48%, TCS-1%, state road and registration tax etc. All factors cited above are driving up the costs of automobiles which need to be addressed carefully.
Automobile dealers play an important role in providing jobs as well as revenue to the government. What do you want from state government in this regard?
The automobile industry is one of the largest employment providers in the country and employs close to 37 million people across the country. But due to the pandemic situation it is not only unable to generate employment, but also raising questions on the sustainability of dealership itself. State government’s role has a lot more to do with the cost of operating an industry. The taxation of the state government is quite high, petrol tax for example is much higher and the affordability of a car is very much determined by the state government’s policies, which in turn have much to gain or lose from how the industry grows. There are some states like Jharkhand & Gujarat and Union Territory like Chandigarh where road taxes are calculated before GST. However, other states, including Odisha, calculate road taxes on ex-showroom price, resulting in the increase of vehicle cost which affects the ability of customers to buy new vehicles, leading to drop in sales. In reference to above, sales were much higher in these states compared to those which didn’t increase road taxes. Our state government should look into this.
What motivated you to step into automobile dealership business?
I was born and brought up in a family running an automobiles business. This business is inherent in my blood. Apart from that, this industry deals with an array aspects, knowledge and experience that motivated me to come in this business.
What is your view on success? Any advice to the youth?
The meaning of success varies from one person to another. It could be career, title, money, big house, stable relationships, social status etc. Success doesn’t come overnight. It needs a dream that won’t let you sleep, a clear vision that you have to focus on, hard work that you have to do even if you feel exhausted, consistency that takes courage & honesty that should last forever even if everyone is against you. What matters in the end is how happy you are. My message to the youth is choose a career that makes you happy and for which you can devote yourself for the rest of your life. Don’t avoid something because it is seen as unacceptable. Do whatever pleases you.
