Is Uber the Cause of India’s Auto Manufacturing Slump? Has the Revolution Begun?

India’s Finance Minister, Nirmala Sitharaman, has started a veritable Twitter storm—well, at least amongst the Millennials in India, whom she blames for the downturn in the country’s car manufacturing sector due, at least in part, to their addiction to ride-sharing.

Image source: uber.com

The downturn in India’s auto sector is of major concern to the government there. The industry employs about 35 million people and contributes about 7% to the country’s GDP. So, when the car industry sneezes, the country catches the flu. Already about 100,000 people have lost their jobs as a ten-month slump has seen car sales slump by 41% and the fear is that this is just the tip of the iceberg.

Behind the downturn has been the slowdown in the overall economy which, along with a banking squeeze, has made it hard to get credit to buy a car. The government has also been pushing for a transition to electric cars over the next ten years or so, which has allegedly contributed to the falling car sales.

 

Nirmala Sitharaman thinks the real cause is India’s younger population, the Millennials, who have abandoned car ownership and prefer to get around using ride-sharing apps. Her comments have been widely ridiculed by those whom she accused of causing the economic downturn. But does she have a point or is she completely raving mad?

Well, the slowdown has impacted every sector of auto manufacturing, including farm and construction equipment, in an economy that is teetering on the edge of recession. So, on the face of it, the simple answer would be a resounding NO! But hold on to your horses. Statistics show that certainly urban millennials, those who would be expected to be upwardly mobile, are opting for ride-sharing schemes in increasing numbers.

The scarcity of credit is one reason but inability to find parking either at home or where ever you have driven to is also a major factor. Of course, if you take a ride-share, then there is no need to find parking. Going car-lite, whereby the need for everyone in a house to own/possess a car is no longer the case, has been a feature of more developed economies in Europe and the USA for a while. The fact that it seems to be happening in India may well indicate the next revolution in transportation is with us and a new future looms, in which we all use some sort of fractional ownership or public transport or ride-sharing scheme to get around. Long live the revolution!

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