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Increase in vehicle registration charges to aggravate auto industry slowdown: SIAM

Sumant Banerji     July 31, 2019

The government's proposal to increase registration charges on new vehicles by 10 to 20 fold is likely to further aggravate the distress in the domestic automobile industry which is already battling an unprecedented slowdown in demand, industry body Society of Indian Automobile Manufacturers has said.  

The Ministry of Road Transport and Highways in its recent draft notification issued on July 26 has proposed increasing registration charges on new medium good/passenger vehicles by 20 fold from the current Rs 1,000 to Rs 20,000, on new truck or a bus from Rs 1,500 to Rs 20,000 in place of Rs 1,500, on new two wheelers from Rs 50 to Rs 1,000 and on new cars from Rs 600 to Rs 5,000.

"Currently, the automobile industry is going through an unprecedented downturn as sales of new vehicles have plummeted significantly over the last several months," said Rajan Wadhera, President, SIAM. "Such increase in the registration charges of new vehicles would further aggravate the market condition negatively."

Sales of passenger vehicles have declined for nine straight months till June 2019 and in 11 of the last 12 months. Moreover, there looks to be no end in sight for the slowdown. The industry has hit new lows across the board as tight liquidity, low consumption sentiment and increasing costs due to stricter safety norms have combined to form a strong headwind. In the first quarter of this financial year 2019-20, car sales declined 23 per cent while passenger vehicle sales have gone down 18 per cent. This is the worst quarterly performance since the third quarter of 2000-01 when car sales slid by 27 per cent and passenger vehicle sales by 23 per cent. In July 2019, final sales figures of which will be released on Thursday, sales are estimated to fall by over 20 per cent.

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