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India’s Market Offers Hope For Mobility Services Companies That Is Lacking In The West

This article is more than 4 years old.

I mentioned China’s auto sales slump in my last Forbes column, but figures from India show a much steeper decline.  Official figures show that car sales in India fell 41% in August, and have produced at least a 20% year-on-year decline in each month since April 2019.  There has been a slowdown in emerging economies across the globe and India's automakers’ trade group, SIAM, also blames the government's crackdown on shadow banks (NBFCs) and a strong monsoon season for the slowdown.  While China's auto market will still produce about 25 million passenger car sales this year—nearly 50% more than the 17 million that will be sold in the U.S.—India will struggle to sell 3.2 million units. So, despite having a population of 1.3 billion versus 1.4 billion in China and 330 million in the U.S., India falls near the bottom of the world rankings of car sales per capita.  

I don’t think it will rise up that league table.  I believe India is the first global market that will see the emergence of de-motorization.  India is the cutting edge for UBER and Ola, the privately-held firm that is India's major homegrown ride sharing company.  

To be fair, the Indian market for motorcycles is huge.  Total motorcycle sales registered 21.6 million in 2018, a double-digit rate of growth.  Those vehicles can also be used as ride-sharing services, though, a fact that l learned while dodging Grab ride-sharing two wheelers in the streets of Bangkok last summer.

So, while executives at western car companies try to de-car or at least de-ICE (Internal Combustion Engine) their companies with rhetoric about transition to mobility services companies, it is in India where it will happen.  It will take time, of course, and the Western companies will be largely uninvolved, with the exception of UBER. Maruti Suzuki controlled 51% of Indian passenger vehicle sales in 2018, with Hyundai posting a 16% market share and local players Tata Motors (which owns Jaguar Land Rover) and Mahindra & Mahindra controlling a combined 14%.

I believe the auto industry will see the evolution of mobility as a service most quickly in India, but it may be the exception that proves the rule.  Also, since it is such a small market for the major OEMs, the “learnings” from new transportation patterns in emerging markets may be totally lost on giants like GM, Ford, Toyota and VW.  

U.S. consumers seem to be utilizing UBER and Lyft for their convenience and reliability, especially in cramped urban spaces like New York City, but there has been scant evidence that consumers are actually substituting ride-sharing service for car purchase.  In fact, New York State DMV data showed an 8.6% increase in new car registrations in New York City between 2013 and 2017.  Here in New York, the big losers have been Yellow Cabs and the NYC subway, which saw ridership fall by 2.6% in 2018 according to MTA data.

Yet, as a longtime New Yorker, I can attest to the fact that average NYC traffic speeds have fallen—last measured at an average of 7.1 mph by NYC’s Department of Transportation—with the advent of ride sharing services.  Traffic is getting worse in New York City, not better. Ill-conceived programs like part-time mayor de Blasio’s congestion charging scheme only serve to transfer money from taxpayers to the government.  

So, while the advent of ride-sharing services may transform India and allow those underserved consumers to rise above insufficient infrastructure, in the developed world those services are only adding to congestion and making existing infrastructure worse.  

I have followed the auto industry for 27 years and I can’t remember a time when management teams were so out of touch with their consumers.  I guess one would have to go back to the ill-fated land yachts sold by Detroit in the 1970s followed by the reactionary econoboxes of the 1980s to find such a disconnect.  

These facts are inarguable and I have made them in prior Forbes columns:

  • Consumers are not buying electric cars.


  • Autonomous vehicles are nowhere their debut in any widespread scale...safety must be paramount to solve this enormously complex technical problem.


  • Ride-sharing services are destroying the horribly inefficient business model of cab services—cab drivers cruising around NYC streets just hoping for street hails are not following the laws of economics and waiting for 20 minutes for an ordered taxi in a small town is not consumer-friendly—not disrupting the auto industry itself.  


People depend on their cars to get to and from their places of employment.  According to the University of Toronto, 76.3% of U.S. workers drive alone to and from work each day, and only 5% commute via mass transit.  That is the key factor here. I commute to my office via NYC subway each weekday, and I would rather take a self-driving car, rickshaw, motorized scooter or horse-drawn carriage.  The subway is literally sickening.  I am an outlier, however.  I own a car, I just don’t drive it to and from work every day.  

So, smaller markets with larger populations and less-developed infrastructure are the perfect markets for automakers to transition to mobility-as-a-service.  But none of the major companies are headquartered in those markets, and none of those markets represent anything more than a tiny sliver of profits to the world’s top 10 car makers.  

It’s a depressing reality for the carmakers, and it is one of the reasons I don’t own car stocks.  Trying to shoehorn a new way of moving around the planet to an already well-served populace is no way to run a business.  Consumers want cars, they want the relative affordability and convenience of vehicles with internal combustion engines, and, with a few exceptions, my friends actually enjoy driving their cars themselves.  

Mobility as a service may be a boon for tech-savvy Indian communities like Bangalore and Gurgaon, but it is decades away from a reality in the good ole’ U.S. of A. 

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