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Auto industry needs government as a saviour to survive the slowdown

Auto industry needs government as a saviour to survive the slowdown

The auto segment has been subject to the slowdown in the previous year. It has dropped down by 20% in May’19. In order to match the market demand, the retail offtake manufacturers cut down their productions.

The passenger vehicle (PV) declined to 2,39,347 units in May’19 as compared to the FY18 production of 3,01,238 units. The data is for seven preceding months from May. In October 2018, PV offtake had been negative for 10 months out of 11 months and sales were up by 1.55%.

 

Since September 2001 the auto industry saw the worst dip in May ’19 and sales were down by 21.91 %.

 

Society of Indian Automobile Manufacturers (SIAM) released the data pertaining to all major segments like commercial vehicles and two-wheelers that were facing the sales downturn is May 2019.

 

Domestic car sales plunged to 1,47,546 units as against 1,99,479 units in May 2018. It was almost 26.03 % downfall. Motorcycle sales declined 4.89% in May 2019 to 11, 62,373 units as against 12,22,164 units in FY18. In May ’19, two-wheeler sales plummeted 6.75% to 17,26,206 units vs. 18,50,698 units in FY18. The sale of commercial vehicles declined 10.02% to 68,847 units in May ’19. Vehicle sales declined 8.62% in May’19 to 20,86,358 units from 22,83,262 units in May 2018.

 

There are no such slowdowns from the last 15 years, therefore, the industry is taking steps to cut down the production.

 

In market situations like these, the government should stimulate growth and also come up with innovative and new steps.

A similar scenario witnessed in 2008-09 and 2011-12 was previously tackled with the help of the government. As the sales declined government cut down the excise duty and new policy measures were implemented.

 

To turn the situation as “unprecedented”, industry body requested the government to reduce goods and services tax (GST) from 28 % to 18 % on all categories of vehicles.

 

To create a market for new vehicles the government should enforce the vehicle scrap policy as soon as possible. It would mandate the owners to recycle the cars making raw materials cheaper for the auto industry. Furthermore, the industries are waiting for the government to restore incentives given on research and development.

 

In May 2019 industry was facing low demand; therefore, they cut down their production across segments. Their production went down to 7.97 %.

 

The government should come up with some serious interventions for stimulating demand in the market. Industries are looking for revival after the elections but that has not happened.

 

The government will be banning internal combustion engines by 2025, of two-wheelers and three-wheelers to adopt electric once. The government should set a practical and integrated approach without any deadlines to convert into electric vehicles (EVs).

 

Maruti Suzuki finds a decline in PV sales by 1,21,018 units in May by 25.06 %. Also, their rival Hyundai Motor India Ltd (HTML) gets the dip at 42,502 units which are 5.57 %.

 

Sales of Mahindra and Mahindra go down to 20,607 units in May 2019. Also, TVS Motors, saw a fall in their sales as it dipped 3.79 % to 2,36,897 units.

 

In the two-wheeler segment, Hero MotoCorp’s sales declined by  7.98 % to 6,37,319 units. As their Rival Bajaj auto grew by 6.84 % at 2,05,721 units in May 2019. In India, the total sales of Honda Motorcycle plummeted slugged 11.4 % to 4,59,932 units. Domestic sales of TVS motors dip to 3.79 % at 2,36,897 units.

 

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