Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Wednesday, 16 August 2017

EESL : Lease cars , do not Buy !



Economic Times ( 16 Aug ) carries a report with following headline :



“  EESL Invites Global Bids for 10,000  E – cars “


Cars are for use by government departments in Delhi / NCR , and should be capable of running 150 Km on a single charge


In the first phase , 1000 cars will be purchased , at an estimated cost of Rs 12 lakh each


EESL has also floated tenders for 3000 AC charging points and 1000 DC ones , to be deployed by NTPC and PowerGrid , depending on the demand




Now , a recent CRISIL Research Study says , it is cheaper to “ rent a ride sharing taxi service “ ( like UBER / OLA ) , if you plan to drive less than 12,000 km / year


At 12,000 km / year , total cost ( fixed + variable ) per km works out to Rs 22 , for a self driven petrol car ( no salary of a chauffer )


It would be safe to assume that this would be Rs 25 / km for an Electric car


As against this , cost of hailing a UBER / OLA works out to Rs 19 / km  !


A personal car is cheaper only if the distance driven is more than 15,000  km annually ," ratings agency Crisil said.


 "And with a chauffeur, that distance doubles to 30,000  km," it said.



I believe :

·         ALL government departmental cars are driver driven


·         Run ( max ) of 100 km per day ( 20,000 km in 200 working days )



Then , why “ Buy “ these 10,000 cars for an Capital Cost of Rs 1,200 Crores ?


Why not float a “ Global Tender “ for leasing out ?  And save that Rs 1,200 Crores ?


Apart from UBER / OLA , I am sure a large number of Start Ups will come forward with offers cheaper than Rs 15 / Km !


And expect offers from Mahindra & Mahindra along with offers from most Indian ( - and quite a few , foreign ) car manufacturers , as well !



What’s more , no need to worry about setting up those charging stations or drivers going on leave ( or strike ! )



I believe , between the Central and the State governments , current fleet of passenger cars is about 3,000,000  ( 3 million / 30 lakhs )



That would require a Capital investment of Rs 3.6 LAKH*CRORE , if replaced ( by purchasing ) , by electric cars !


All this when a typical “ Owned “ car is hardly used for 3 hours ( 12 % ) per day !



Apart from savings in Capital Cost , consider the following :


·         Saving / km = Rs 10 ( Rs 25 for owned E-Car less Rs 15 for rented UBER / OLA )


·         So , for 20,000 km / year , that would be Rs 2 lakh per car per year



·         That is  Rs 200 Crore / year  for 10,000 cars !



When the entire World is moving towards a “ Economy based on Sharing of Under-Utilized Assets “ , for improving “ Asset Utilization “ , it does not make sense to BUY cars



A capital-starved , poor country must try to use all its “ assets “ , round the clock



Just one example : All buildings that are currently occupied / used , only for 10 / 12 hours , can be used ( may be ) for 20 hours per day !



I urge Shri Saurabh Kumar ( MD – EESL ) to consider my suggestion of leasing



He may also want to include following condition in “ E Car Leasing Tender “ :



“ Tenderer shall offer a 5 year lease , with a minimum of 10 % REDUCTION in the per km lease rental , each year over the rental for the preceding year “



Justification :


·         As per following report of Investment Bank UBS , E car prices in 2018, drop below the prices for petrol cars ! This trend ( of prices dropping for E Cars ) will continue for foreseeable future







Consequence ?



·         If leased , that savings of Rs 200 crore / year mentioned earlier , will keep increasing , year after year !



Shri Saurabh Kumar will find whole-hearted support from Shri Nitin Gadkariji / Shri Piyush Goyalji





17  Aug  2017



1 comment:

  1. Excellent suggestion to Lease cars. There is no point in buying govt vehicles, which are ultimately financed by Tax Payers.

    ReplyDelete