Buying a car is often a terrible waste of capital, says Maruti chairman

Maruti Suzuki chairman R.C. Bhargava has made a rather interesting statement that will stun you, at least initially.  In a recent interview, Mr. Bhargava said had this to say,

People should start thinking why do I need to buy a car. I buy a car costing Rs 10 lakh. And 80-90% of the time it  is lying idle. What a terrible waste of capital.

Yes, he actually said that but there’s much more to this statement. There’s a wider context in which Mr. Bhargava made this statement, of that of shared mobility. Batting for shared mobility, the Maruti chairman wanted state governments to do more in order to encourage shared mobility, which in his opinion, would reduce congestion, cost  of mobility and parking problems.

Shared mobility refers to app-based car pooling, opting for app-based on-demand taxis or using on-demand car  sharing platforms such as Zoomcar and Drivezy. The whole point behind such services is that a single car can beused by multiple people as and when they need them.

This makes individual car ownership or at least multiple car ownership redundant for most people living in the bigger cities of India, where such services are well developed. In future, such services are expected to cover more parts of India.

Meanwhile, here are the other major things that the Maruti chairman said in the run up to that one big statement  that’s rather surprising from a leading car industry executive,

Shared mobility improves utilisation of vehicles as well as reducing congestion, parking problems and cost of  transportation. Today, laws, especially, state government laws, are not pro-shared mobility. That’s the problem. I  would like there to be some uniformity of good laws, which, in fact, give incentives for shared mobility over  individual mobility. A car company’s responsibility is to provide the best forms of mobility at cheaper costs to the  citizens. “Is that not my job to promote it? Why is it my job to promote individual ownership and make you all  subject to lose a lot of your money by having cars.

But what will Maruti Suzuki gain if people starts dumping individual car ownership in favour of car sharing?

Maruti’s chairman says that most private car buyers don’t utilize their cars enough, which means that the average life span of a car is much larger. This results in the car being in service on the road,  with the same or a different owner, for a longer period of time. As the car isn’t replaced quickly, car companies actually stand to lose as the replacement cycle slows down. Here are the exact statements he made,

What is the most important parameter for determining when a car should be scrapped and replaced — how much it has run. Now if more people are able to use a car and run distances which are otherwise run using two-wheelers and  three-wheelers, will that result in more car running than an individual car running or not. So, the replacement cycle will become faster, I will have more sales … That is why I want shared mobility.

Do you think shared mobility is a smart idea? Do let us know in the comments section.