Cars on Subscription ? Convenience Redefined

Principle business model for the Auto Industry , remains :

Selling  cars  offline ( and displaying ‘ online ‘ )

But this is slowly changing

Speaking at the recent Global Mobility Summit, Shri Nitin Gadkariji hinted that Tata Motors and Ashok Leyland could form an “ Operator Company “ on the pattern of London Transport Model

“ The government is ready to give " on a platter " all necessary regulatory clearances to investors ready to run public transport buses on electricity or alternative fuel…..

I have urged manufacturers that apart from manufacturing buses, you open an Operator Company. You will get business .” 

 

 [ https://timesofindia.indiatimes.com/business/india-business/gadkari-offers-approvals-on-platter-for-electricity-run-public-transport/articleshow/65723083.cms  ]

Dear Shri Gadkariji ,

Whereas , citizens ( especially , of the metros ) would be very happy if TATA and Ashok Leyland grab your offer and start Operator Companies , you can only “ exhort “ them – but no more

But there is one company who you can give ( without it asking ),  all those “ regulatory clearances “ , and ( more or less ) “ order “ it to turn itself into a Operator Company  !

I mean , EESL which ,

·         placed an order for 10,000 electric cars ( Jan 2018 ) on TATA and M&M

·         has so far received ( 153 + 400 ) cars in 8 months

·         expects to receive the balance 9,000 + cars in the next 7 months

·         getting ready to release the second order ( also for 10,000 cars ) by Dec 2018

·         plans to replace the entire Petrol / Diesel car fleet of government ( 500,000 ) cars with electric cars in the next 5 years

[ Refer : https://energy.economictimes.indiatimes.com/news/power/the-second-tender-for-10000-electric-cars-will-be-floated-soon-saurabh-kumar-md-eesl/65747701  ]

Currently , EESL business model consists of ,

·         Outright purchase of these cars

·         Leasing out the same to different government departments

This already makes EESL , somewhat of an Operator Company  !

After 5 years , when it leases out 500,000 electric cars to Central and State governments , would that not make EESL the biggest “ Operator Company “ in the world ?

During the past few months, I have been urging EESL to change its business model as follows :

·         Instead of “ buying “ , get these cars on “ Wet Lease “ from manufacturers

·         The “ sub-lease “ to the government departments

Not only will this save thousands of crore of initial capital investment but also save hundreds of crore of recurring operating / maintenance expenses

But , even this can be improved upon by tweaking its business model as follows :

·         EESL will not “ buy “ electric cars but take it from the manufacturers on “ subscription “

Here are some other options :

·         Govt departments buy “ Car Subscriptions “ directly from TATA / M&M etc , bypassing EESL ( - no value addition by going through EESL )

·         EESL enter into a “ Rate Contract “ with TATA / M&M etc , and government departments issue “ release orders “ with copies to EESL

Several foreign car manufacturers ( notably , BMW – Mercedez Benz – Porsche – GM etc ) , have started offering to the buyers , “ Subscription Deals “

A “ Car Subscription Company : CANVAS “ offers as follows :

$ 375-1125 per month ( for 500 miles per month / Additional $ 35 per month for another 350 miles )

https://timesofindia.indiatimes.com/auto/miscellaneous/soon-drive-your-car-on-monthly-subscription-model/articleshow/65728762.cms

Other References :

https://timesofindia.indiatimes.com/india/india-needs-30-lakh-buses-for-transport-has-only-3-lakh/articleshow/65726517.cms  ]

http://www.driveclutch.com/

https://myblogepage.blogspot.com/2018/08/eesl-grab-this-chance.html

11  Sept  2018

www.hemenparekh.in/ blogs