Nirmala Sitharaman has recently been in the news due to her comments on the auto sector. Last week, while addressing reporters in Chennai, Nirmala Sitharaman had said, “The automobile and components industry has been affected by BS6 and the mindsets of millennials who now prefer to have Ola and Uber rather than committing to buying an automobile.”
The Twitter warriors, newly converted industry experts, and opposition created a furor over the statement of FM Nirmala Sitharaman.
But the people with ‘Skin in the Game’ have supported or vindicated her statement. Almost four years ago on September 10, 2015 veteran entrepreneur and Mahindra Group chairman made a similar statement about the auto sector. “The age of access being offered by taxi-hailing apps like Uber and Ola is the biggest potential threat to auto industry,” said Mahindra. “A lot of youngsters who can own vehicles today don’t want to own one, but only need access to transportation,” he added.
Mahindra is the second largest automobile manufacturer in the world, after Tata Motors. It is top SUV manufacturer in India and also competes in the business of two wheelers, bus, pickup, tempo, trucks, and commercial vehicles.
Yesterday, RC Bhargava, the veteran automobile executive also vindicated the statement of Finance Minister Nirmala Sitharaman over preference of shared mobility. In an interview with Business daily Livemint, when Bhargava was asked whether emergence of shared mobility has impacted sales, he replied, “Today, a youngster has so many options of what he can do with his money, that a lot of them prefer other options than buying a car because he can still get his mobility through a car from Ola and Uber which is much more economical. So, what the finance minister said is 100% correct. That is what the millennial generation is thinking.”
Bhargava also said that younger generation prefers gadgets over cars. “Today, a youngster wants to buy a nice smartphone and wants to meet his friends at a restaurant and have a good time. If he buys a car, then he probably can’t do these things,” he said.
RC Bhargava is credited with revolutionizing India’s auto sector. Under his leadership, Maruti Suzuki became a market leader with almost 50 percent, which means that every second car on the road is produced by Maruti. After he retired from the post of CEO of Maruti Suzuki, the company appointed him Chairman.
The leaders of automotive industry are aware of the disruption posed by ride sharing startups to their businesses. Therefore, the major automotives have themselves invested in ride sharing startups. Hyundai, the second largest automotive player in the country invested 300 million dollars in Ola and started offering subscription service through the self-drive company Revv. Mahindra, the third largest player in commercial vehicle market invested 300 million dollars in electric ride sharing service called Glyd, and 400 million dollars in Zoomcar.
The investment in ride sharing services by second and third largest players signifies that the industry is aware of threat posed to them by creative disruptors, and they are taking steps to hedge risk.
Chairman of leader of the industry, Maruti Suzuki has accepted that ride hailing services had dented the demand for new cars, and ‘Millennials’ have different preferences, while the second largest player made millions of dollars investment in the ride hailing business. The MD of third largest player prophesized about the threat posed by ride hailing services almost four years ago, and made investment in the business.
The Twitter trolls and the dolts who have an opinion on everything ranging from macroeconomics to social science should read the investment pattern of people with ‘Skin in the Game’ to support or nullify the statement made by Finance Minister. They should also read the statements of industry veterans, people like Anand Mahindra and RC Bhargava to express an informed ‘opinion’.