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As ride-hailing companies Ola, Uber, Meru, and others reduce the number of cars on their platforms because of a lack of demand, some of India’s leading automakers might also feel the pinch as commercial fleet sales formed a significant part of total vehicle sales.

Some automakers such as Maruti Suzuki India Ltd had introduced specific models, such as Dzire Tour, targeting the commercial sales sector in the past few years as they expected a bump in sales to fleet aggregators because of the popularity of shared mobility.

Vehicle sales to commercial fleets started to decline in FY20 because of lower incentives given to drivers by Ola and Uber, which led to increased defaults on vehicle loans given to car owners.

Sales further crashed in FY21 following the coronavirus outbreak as customers started to prefer personal mobility.

Sales of Toyota’s multi utility vehicle Innova have declined 15-20% in the current year as fleet owners have stopped buying new vehicles, said Naveen Soni, senior vice-president, sales and service, Toyota Kirloskar Motor Pvt. Ltd.

“Lack of sales to commercial fleet owners has been a big issue for our Innova sales. There is a big pushback from such customers now. Most of them are reluctant to buy new vehicles. I think a turnaround now depends on the (covid) vaccine," he said.

Cab aggregators and fleet service providers may not be back in the market for the next two years or so as there is ample supply of unutilized vehicles in the market, said a senior executive at an automaker.

“These vehicles have a shorter shelf life as owners look for quicker replacement compared to the ones used for personal purposes. Hence, manufacturers were planning to come up with vehicles with lower specifications to cater to this market. The sudden increase in vehicle purchases for personal use may not last for long because of the economic hardships. So, there will be an impact," said the executive.

Increased usage of ride-hailing services in metro and tier-1 cities, along with the economic slowdown has been behind falling sales of vehicles over the past two years.

Hence most of the manufacturers conducted internal surveys to study the impact of such services on personal vehicle purchases in the new decade and decided to tweak their offerings to cater to commercial channels.

“Tomorrow, if we have a vaccine, there will be a quick rebound in the business of cab aggregators. The business model is there to stay in countries such as India but now it is very early to predict when the recovery will start. Last year, original equipment manufacturers were considering the impact of cab services on personal vehicle sales in the long term but at the moment sales have been hit because of the pandemic. The business model will survive but it is difficult to say when it will return to normal," said Som Kapoor, partner, EY.

As big corporates, especially information technology and consultancy firms, adopt a permanent work-from-home strategy, fleet owners are not bullish about buying new vehicles and plan to reduce the existing size of vehicle fleets.

Commercial segment sales contributed up to 35% during peak demand two years ago, said an executive at a Hyundai dealership in Pune. “This was driven by the Xcent variants. However, as of today the commercial segment sales are below 5% for us. The demand from cab aggregators had started drying down from the last year," he said.

Financial institutions are pushing drivers to recover loans, said Tanveer Pasha, president, Karnataka-based Ola Uber Drivers and Owners Association.

“We have requested Ola and Uber to reduce their 30% commission that they charge per trip. However, they are not listening. Ride-hailing companies are picking up customers from the airport at 50-60% of the normal fares. Such trips are adding to the problem for those who are getting rides today," said Pasha.

malyaban.g@livemint.com

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