The slump in IT and IT-enabled services and tourism due to the global slowdown has directly impacted sales of vehicles like Chevrolet Tavera, Tata Indica and Toyota Innova which are largely used as cabs in these sectors.
Estimates suggest sales of these vehicles in the taxi circuit have gone down by atleast 20 per cent in the last six months due to over capacity. Further with a number of these vehicles lying idle, defaults have gone up resulting in banks turning cautious in financing new vehicles.
"Atleast 20 per cent of our vehicles used to be picked up as taxis but now that percentage has gone down to under 10 per cent," said Sandeep Singh, deputy managing director, Toyota Kirloskar Motors Ltd. "The recession has hit the sectors that employ these taxis the most and there is a fall in demand for financing from these segments as well. We are not complaining as we have always marketed the Innova as a family vehicle."
Faced with rising defaults, banks have themselves assumed a cautious approach.
"Lending to the cab segment has dropped to 10 per cent of what it used to be earlier," said a senior executive of a private sector bank. "This is a result of the rise in delinquencies."
Many corporates have been downsizing fleet size thus increasing the number of idle vehicles. With economic viability going for a toss, operators have started defaulting but with no rules to reposses, banks too are stuck.
"There have been a number of cases of delayed payments and downsizing of fleet by corporates and that has left operators high and dry," said Rajan Pental, senior vice president, auto loans, HDFC Bank. "It becomes difficult to deal with defaults as there are no rules for repossesion of these vehicles. Even if we do re-posses because they have taxi licenses, they cannot be sold."