Goa: The city of good times –Goa is giving a tough time to the automobile industry as the demand slipped between 20 per cent and 70 per cent in the last two years, depending on segments, reveal a local industry body.
The coastal city stands on top in the country in terms of per capita vehicles and also ranked 15 in the world in terms of vehicle density. According to an estimation by Goa Automobile Dealers Association (GADA), there are 625 vehicles on every 1,000 people in the state. On an average, every household has about 2 bikes and one car.
Goa witnessed at least half a dozen vehicle sales outlets being shut down due to various factors like stringent lending norms, policy changes, ban on iron ore mining and drop in number of tourists.
“Earlier as soon as letter of intent was issued for opening up a dealership, the bankers would immediately line up to fund but now that has changed as the lenders have tightened their criteria as they are looking at every details like debt to equity ratio (ideally 1:1, they want)… they also look at the assets and other collateral,” says Prashant Joshi, President GADA and Chairman FADA (Goa Chapter).
Most of the dealerships operating in rented premises were closed down as they could not meet the increased leasing payment while upfront GST payment added at least 20 per cent to their capital cost that badly impacted the business.Prashant Joshi, President GADA and Chairman FADA (Goa Chapter)
The IL&FS debacle and closure over 200 dealerships due to financial mismanagement across India has led to an extra-ordinary caution.
“Most of the dealerships operating in rented premises were closed down as they could not meet the increased leasing payment while upfront GST payment added at least 20 per cent to their capital cost that badly impacted the business,” Joshi added.
Goa market is largely dependent on tourism as annual tourists’ number is almost five times of the local population. Goa, a Portuguese Colony till 1961, has a total population of 15 lakh and receives about 75 lakh tourists every year but doesn’t have an organized and robust transport system. The new age ride sharing companies like Ola and Uber is also not allowed here. The city has been mostly run with unorganized self drive and hired taxis which is now impacted by the change in policy.
The government has recently stopped giving permits to unorganized and individuals offering self drive cars and rolled out a ‘rent a car policy’ under this a new criteria has been set that includes firm which have parking space, 24*7 service centre, and offices at five different locations across city can get the permit.
Under this policy, so far only four to five licenses have been issued for self drive business. This has brought down for the both in passenger vehicles and two-wheelers.
“Two years Goa had a market for about 4500 two-wheelers every month of which 500-600 used to go to bike rental providers, now that has completely gone and the sales has declined by more than 25 per cent. So now the annual sales of two-wheelers in Goa have come down to 35,000 from about 60,000 two years ago,” says Vallabh Kuncolienkar, Secretary GADA and a Honda 2Wheeler dealer. While passenger vehicles which used to sell 1500 to 1800 units every month has come down to 1000 to 1200 units a month.
He further added that the other dampener has been increasing tariff of hotels and taxis which cause reduction in tourists. The most impacted segment in terms of sales in Goa is commercial vehicles because of the ban on iron ore mining. The ban on mining also impacted other segments as the people working in this industry was one of the biggest spenders.
Iron ore mining has been one of biggest contributors to the Goa’s economy which was first banned after Supreme Courts intervention in 2012 but restarted in 2016 but the ban was re-enforced in 2017. About 3 lakh people were involved in mining industry directly or indirectly.
Like elsewhere, tightened finance also impacted the demand as about 90 per cent of passenger vehicles were bought through finance. This further ensued into sales outlets being closed. Goa, which had about 40 dealers, witnessed the following closures in the last one year (Based on ETAuto Research).
1. Quatros Suzuki in Margao – (It was owned Mr Evancio Quatros who had three two-wheelers dealerships ( Yamaha, Suzuki and Mahindra and Jeep) which were closed. Now has opened a new JAWA Dealership three months ago.
2. Ashvek Motors in Panjim – Suzuki Two-wheelers dealership
3. Karpe Automotive – Suzuki Two-wheelers dealership
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