Like a well oiled machine, news articles about the economy in Goa starts off about the state of depression – the poor figures clocked by various sectors in the economy. The realty industry is in a slump despite claims to the contrary; the jewellery industry is looking up to the heavens for succour and the same holds true for the automobile industry.
Maruti still remains the market leader but its numbers have also dipped. However there is a segment of the population for whom money is a gas. Depressions come and go but they still buy their rich toys. In this instance the cars priced over Rs 80 lakh and well into a crore of rupees.
Venkat Rao, MD, Audi Goa smiled when asked the question about sales. He said “The increase in road tax to 18% has affected sales. Earlier we had parties coming from Karwar, Hubli, Belgaum and other neighbouring areas. Now they are going to Mumbai and Bengaluru.”
The prices at which these cars are available could mean a difference of up to a lakh, which is substantial. Mr Rao said given that the market was very small in a small State, he and other players in this segment could not compete with dealers in other States. They, he said had bigger stocks which also meant bigger discounts.
The luxury car market in the State is small at around 300 a year. That number has this year taken a hit with enquiries having reduced dramatically from surrounding regions.
Mr Rao said “There are no queries coming from those areas.” Audi averages around 100 cars a year which adds up to around 300 for the luxury car category in the State. The number was substantially higher when mining was on. Industry watchers said that the State used to receive around 600 enquiries from prospective owners from neighboring States on an annual basis
Aakash Khaunte, managing director, Counto Motors which represents Mercedes Benz said the market had been flat for a couple of years. He said “This is a competitive market and it is a small market and the people who can buy these cars are limited. All the companies in this sector I think sell around 350 to 400 cars every year. I mean all the cars from the various segments these companies operate in.”
A former senior executive of one of the dealerships now not working in this segment who did not want to be identified said “Earlier there was a lot of funny money floating around. If Harish purchased a high-end BMW then his neighbor would try to match it or beat him by buying an even more expensive car. Now those days are long gone. This 18% road tax is killing the market.”
The Chief Minister Laxmikant Parsekar in his budget speech for 2016-17 said that the luxury cars, SUVs costing more than Rs 15 lakh and two-wheelers costing more than Rs 2 lakh would have to pay 15% VAT from April 1. The government also hiked registration taxes on new vehicles; two-wheelers costing above 1.5 lakh will have to pay a tax of 10 per cent, while four-wheelers priced above 6 lakh will be taxed at 9%.
This had resulted in the German marquee brands reporting a 30% drop in enquiries and are even witnessing de-growth in the luxury car segment. Now with the road tax the high-end market has gone into depression.
An industry observer said the odd sale of cars over a crore were happening but they were too few and far between. The fear is the market could be dead very soon given that it is comatose now.
According to industry data the Indian luxury car market has grown eight-fold in the last seven years. Units increased from a meagre 4,000 in 2007 to 35,000 in 2015. It is projected that the market will at least double by 2020. That perhaps could be the prayer that could be uttered by the players in Goa as they hope to see a change in the sentiment and perhaps even a change in the taxation in the State.
