The Indian auto industry is looking for a stimulus package from the Government to check the decline in sales.
The economic slowdown and its impact on consumer sentiment led the auto industry to register a sales decline in June, across categories. Categories such as medium and heavy vehicles saw sales fall by 21 per cent.
Seeking a stimulus
“The Government needs to bring a stimulus package for the auto industry that will help in achieving higher growth,” said S. Sandilya, President, Society of Indian Automobile Manufacturers (SIAM), addressing reporters here on Friday.
The industry body said that until the Government comes with some relief plans, the industry would continue to suffer in the coming months. On July 9,
“There needs to be fleet modernisation of heavy commercial vehicles (buses and trucks). Government purchases should come back and there should be some certification in vehicle scrappage schemes so that people get some incentives to purchase new vehicles after scrapping their old ones,” said Vishnu Mathur, Director General, SIAM.
He said the extension of the Jawaharlal Nehru National Urban Renewal Mission scheme for purchase of buses will help accelerate demand for buses in the near future and the numbers may turn positive in the second half of this year.
However, other categories of vehicles will depend on economic conditions, and categories such as utility vehicles will improve in sales if the Government helps in correcting excise duties.
Excise effect
The sales of utility vehicles were hit in the first quarter of this year because of the hike in excise duty from 27 per cent to 30 per cent.
“We anticipate this year to be one of the toughest, with passenger vehicle sales likely to decline by 2-5 per cent on a year-on-year basis,” said Rakesh Batra, Partner and National Leader - Automotive practice, Ernst & Young.
The increase in diesel prices is likely to hamper sales of diesel vehicles and their share is likely to decline to below 50 per cent this year from 58 per cent last year, he added.
Puneet Gupta, Principal Analyst, India Automotive, HIS, said the Government is likely to support the industry in the near future and, therefore, companies have to come forward to improve their sales.
“The Government has many more issues now and pressure because of the rupee devaluation against the dollar and oil prices going up. Therefore, companies should focus more on rural areas and give good offers to increase footfalls in showrooms,” he said.
ronendrasingh.s@thehindu.co.in