Finance Minister Nirmala Sitharaman's suggestion that millennials may perhaps be contributing to the slowdown in the auto sector by their dependence on cab-hailing apps has found a supporter in RC Bhargava, the chairman of the country's largest carmaker Maruti Suzuki.
Sitharaman had become the butt of satirical meme and trolls after she said millennials were shunning car ownership because of the ease of using cab-hailing apps like Uber and Ola.
Supporting Sitharaman's view, Bhargava said ride-hailing companies have hit the demand for new cars in India as young buyers do not need to buy cars for commuting and could spend most of their income on electronic gadgets, a media report said.
Bhargava also said there was "no point" in a temporary cut in the goods and services tax (GST) on vehicles as it would not help the industry in the long run, according to Livemint. The introduction of stricter safety and emission regulations would improve the quality of vehicles produced in India and put them on a par with those in Europe, the report cited Bhargava as saying.
The buying power of Indians has not risen in line with the increase in car prices, leading many to postpone purchases, he said.
"The per capita income in India is almost around $2,200 (per annum) and in Europe, it is approximately $40,000. In terms of all standards, which add to the cost of the product, there is no difference between Europe and India," the report quoted Bhargava as saying.
He also found the taxation levels in India, whether it's in terms of GST, road tax and others, were much higher than in Europe or China. "How do you expect a country with such a low per capita income to have enough customers to have the capacity to pay for a car and grow at 10-15 percent every year?" he said.
Passenger vehicle sales in the world's fourth-largest automobile market have steadily declined as the country faces an economic slowdown and growing unemployment and erosion of liquidity affect financing options.
The ownership costs have also shot up. Bhargava said Sitharaman "is correct" in saying that the youth are opting for Ola and Uber rather than buying new vehicles during the initial years of their careers, the report said. Last month passenger car sales skidded by about 31 percent reinforcing reports of the county being caught in an economic slowdown.