Auto industry body, Society of Indian Automobile Manufacturers (SIAM) urged the government to implement some immediate steps including reducing GST rates on cars from 28 per cent to 18 per cent to help manufacturers amid slumping sales. The body on Monday also asked for initiation of scrappage policy.
SIAM President Rajan Wadhera said that the market is yet to respond to the various measures initiated by Finance Minister Nirmala Sitharaman last month. "The sales report coming out from various companies for the month of August 2019 has been very dismal with over 30 per cent erosion of sales for passenger vehicles. The commercial vehicle and two-wheeler sales are also significantly negative indicating that the market has still not responded to the various measures initiated by the Finance Minister last month," he said in a statement.
Wadhera said that the series of announcements on credit availability and reduction of cost of credits do not seem to have percolated to the NBFCs. NBFCs support the bulk of finance for the automotive industry. "The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers," said Wadhera.
He added that the industry has done everything in its power to stay afloat. Wadhera added that the industry is offering attractive deals and discounts to the customers but they can only offer limited deals. "However, the ability of the industry to provide large discounts is limited and this only highlights the need for Government to consider reducing the GST rates from 28% to 18% which would significantly reduce the cost of vehicles and in turn create demand," he said.
He also urged the government to come up with incentive-based scrappage policy.
"As the festival season is around the corner, it is imperative that these decisions are taken quickly and announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry," said Wadhera.
Major automotive companies such as Maruti Suzuki India, Hyudai, Mahindra and Mahindra, Honda and Tata Motors reported a double-digit de-growth in August sales.