(Bloomberg) -- Millennials’ preference for ride-hailing services such as Uber and Ola over owning cars, and not high taxes, is among reasons behind India’s slumping vehicle sales.
That’s the argument advanced by Finance Minister Nirmala Sitharaman Tuesday when she spoke about steps the government has been taking to revive demand and bolster economic growth from a six-year low of 5%.
While automakers have been seeking a cut in tax on vehicle sales to 18% from 28% to boost demand, Sitharaman said: “the mindset of millennials, who now prefer to have Ola and Uber rather than committing to buying an automobile” is part of the reason why sales have been hurt.
This isn’t the first time services provided by Uber Technologies Inc. and ANI Technologies Pvt. have been blamed for poor sales. A study by the Reserve Bank of India in April said the decline in overall four-wheeler sales in the last two years can in part be attributed to the rise of ride-hailing apps.
Last week, Uday Kotak, Asia’s richest banker, said his son was “more comfortable” with Ola and Uber, suggesting cars were no longer a status symbol. “What the auto sector really needs to focus on is be aware of some of the structural changes which are happening in front of us.”
Sitharaman last month took steps to support the industry that included enhanced tax breaks on new vehicle purchases and lifting curbs on government department from replacing old automobiles. Car sales suffered their biggest monthly drop on record in August, as deliveries fell 41% from a year earlier to 115,957 units.
It isn’t only car sales that have been hit. Truck and bus sales dropped 39% in August, underlining the problem of waning demand in the economy that extends beyond millennials and their preferences.
©2019 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR