Kashmir Auto Industry Hopes for Boost in Sales
Halting Influx of Second-hand Autos May Revive New Car Sales
“Business has started to pick up and we hope that it will be back on track very soon.” – Baldev Singh, managing director, Peak Automobiles
Byline: Bisma Nazir
For years, the automobile industry flourished in the Kashmir Valley through dealers buying cars cheaply from outside the union territory and selling them at a profit in the Valley. However, almost six months ago, the government has put a stop to the registration of cars from outside Jammu and Kashmir, which has hit automobile dealers hard.
Thousands of vehicles registered in Gujarat, Rajasthan, Delhi, Uttar Pradesh and Haryana can be seen plying the roads in the Valley. The culture of purchasing cars (both commercial and private) from outside Jammu and Kashmir is not new. However, the number of such vehicles has swelled in the last five or six years, particularly after the 2014 floods. Brokers buy cars that are close to the end of their shelf-life from states such as Gujarat, Haryana, Rajasthan, Uttar Pradesh and Delhi and sell them at attractive prices to the locals.
The shelf-life of a diesel-fuelled car in Delhi is 10 years while in Jammu and Kashmir it can be used for 15 years. The brokers are therefore able to buy cars that are almost 10 years old at nominal prices and sell them to customers in the Valley at a profit. The buyers find the prices low compared to that of new cars. The business of selling non-local cars has flourished over the years as a result. However, the government’s action about six months earlier has affected the automobile business in the Kashmir Valley.
The automobile industry was already in the doldrums owing to restrictions imposed in the wake of the COVID-19 pandemic and post abrogation of Article 370 in 2019. Traditionally brokers engaged in the business of selling non-local vehicles called the shots. The business flourished on the back of unaccounted money or what is categorised as black money. No banking transactions took place and no taxes were paid. The vehicles were bought and sold for cash. This also meant that there was no dealing with official red tape and the business progressed quite smoothly. And people found it easy to purchase these cars.
Till recently, the motor vehicles department allegedly connived with car dealers to re-register the vehicles and allot fresh local registration numbers to them.
Meanwhile, the business of running commercial SUV cabs continues to be monopolised by a few who own the 8- or 10-seater vehicles. Strangely, such commercial vehicles that can seat 8-10 passengers are popular only in the Kashmir Valley. In the rest of the country, the market prefers smaller commercial cabs. For instance, Chevrolet stopped manufacturing the 10-seater SUV Tavera almost five years ago but every Tavera from other parts of the country finds its way to Srinagar because of the high demand.
The rates in the Valley for cabs are also exorbitant compared to those in the rest of the country. In fact, the tourism sector in Kashmir Valley is most expensive in terms of logistics be it hotels, guest houses or taxis, according to industry sources. For example, a cab ride from Srinagar airport to the city costs more than Rs 1,000. It costs a few thousand rupees to book a cab from Srinagar airport to the tourist resorts of Pahalgam, Gulmarg and Sonmarg. The high cost does not seem to affect demand, however, as seen from the fact that the fee for registration at the airport taxi stand is a few lakhs but SUV owners happily pay the amount without any hesitation.
The influx of small commercial cabs from outside Jammu and Kashmir has diluted the monopoly of the 8- and 10-seater commercial cabs. It has also had an adverse effect on the legitimate business of automobile dealers in the Kashmir Valley to a certain extent.
In an exclusive interview with Kashmir Central, Irfan Ahamad Narwaroo, managing director of Jamkash Vehicleades, the sole authorised distributor of Maruti Suzuki, said that the business has suffered a huge setback following the COVID-19 pandemic and other restrictions. First, the devastating floods of 2014 affected sales, he said. “We were still emerging from the impact of the floods when COVID-19 broke out and for two years we could not do much business. It is only since the beginning of 2022 that the automobile industry has been gradually picking up,” he added.
Asked about the influx of vehicles bearing non-local registration numbers, he said that this has been the biggest challenge for the industry in the Kashmir Valley in the recent past. The culture of purchasing second-hand vehicles from other states has caused major damage to the automobile industry in the Valley, he said. He expressed relief at the government having finally woken up to the challenge and taking steps to stop the re-registration of second-hand vehicles brought in from outside the region. “Still you will find three or four cabs out of 10 plying Srinagar roads are from outside the region,” he said.
He suggested that the government should make the procedure for permits for new commercial cabs easier. Hoteliers and houseboat owners should be given free permits to maintain their own fleet of cabs, he added. “This is the right time to start giving permits to the hoteliers and houseboat owners so that by March 2023, tourists find cabs available at normal prices,” he told Kashmir Central. He was optimistic that if this was done, business was likely to pick up in the coming months. There is scope for automobile sales to soar in Jammu and Kashmir as only 230 persons out of every 1,000 own a car in the region, he pointed out. The automobile sector, despite the many challenges, had the potential to grow in leaps and bounds, he added.
Baldev Singh, managing director of Peaks Automobiles, told Kashmir Central that car sales had been dealt a severe blow by the COVID-19 restrictions. He said that the company was still running at a loss, but expressed hope of a revival that he saw as inevitable. Singh said that he had managed to avoid cutting the number of employees during the period of low sales in the hope that things would improve soon. “Business has started to pick up and we hope that it will be back on track very soon,” he added.
