October 21, 2020

SIAM asks for GST minimize as automobile gross sales fall 78% in April-June; droop for ninth consecutive quarter

Car gross sales throughout classes recorded its steepest decline final quarter as manufacturing in addition to gross sales had been severely impacted by the Covid-induced lockdown, prompting business physique Society of Indian Car Producers (SIAM) to make a renewed case for a GST minimize on autos to generate demand.

Passenger car gross sales fell for the ninth straight quarter by 78.43% to 153,734 models in April-June 2020, SIAM knowledge confirmed. Gross sales of economic autos declined for the fifth consecutive quarter by 84.81% to 31,636 models in the identical interval. In the meantime, two-wheelers slid for the sixth straight quarter by 74.21% to 1,293,113 models within the interval beneath evaluate.

Automakers in India report wholesale dispatches from factories and never retail gross sales made to clients.

Holding that the present slowdown is the deepest and the longest the business has seen up to now twenty years, SIAM president Rajan Wadhera stated the business would proceed to have interaction with the federal government for incentives to get well volumes, that are anticipated to tank by 26-45% throughout segments within the ongoing fiscal yr. Car gross sales within the native market dropped by 9-29% in FY20.

Passenger Autos 7,12,684 1,53,734 -78.43
Industrial Autos 2,08,310 31,636 -84.81
Three-wheelers 1,49,797 12,760 -91.48
Two-wheelers 50,13,067 12,93,113 -74.21
TOTAL 60,84,478 14,91,216

“We’ve been struggling on the demand facet since final yr. Final quarter, the decline (in wholesale volumes) has been on account of Covid-19. With GDP projected to contract within the ongoing monetary yr, the fallout will likely be harsh on the auto business. Consequent to that, there’s a sturdy want for a requirement stimulus,” stated Wadhera.
SIAM has urged the federal government to quickly cut back GST charge by 10% throughout all classes of autos. The inducement for the scrappage scheme may very well be generated within the type of 50% rebate in GST, street tax and registration prices, Wadhera stated The auto business with an anticipated profitability of round 3-9% will not be able to supply reductions anymore for scrappage incentive.

Moreover, the business physique has really helpful the introduction of an incentive-based car scrappage coverage and a procurement programme backed by satisfactory funding for diesel and CNG buses by state transport undertakings (STUs) to spice up demand.

Wadhera stated whereas automakers have resumed manufacturing, it has not been easy because of provide chain points owing to continued restrictions in some locations the place provider factories are situated, non-availability of labour and delays in clearing of import consignments, in addition to Covid-19 instances rising in and round manufacturing websites of some member corporations. Wholesale is due to this fact lagging retail.

Within the present situation, he doesn’t see any case for funding within the auto sector, together with electrical autos. “Coupled with final yr, we’re taking a look at a 50% drop (in volumes) in two years. It’s going to take one other three to 4 years to succeed in the height stage of 2018. So proper now, there’s sufficient capability within the sector and therefore no funding is required there. Furthermore, the auto business has invested closely for the transition to BS-VI emission norms in a really quick span of three years,” Wadhera stated. He added that even when they need to, auto corporations should not have the revenues to spend money on electrical autos and would wish authorities assist for India to not miss the EV revolution.

As regards self-reliance, Wadhera stated round 70% of the elements have been localised however as a result of migration to BS-VI emission norms, imports of sure elements have elevated within the vary of 1-6% and these will proceed until the time home elements producers develop experience and scale for a similar. In future, any new guidelines for the auto sector should be deliberate in a way that “laws and localisation go hand in hand.”

On a question on whether or not there have been job losses within the auto sector because of Covid-19, he stated as of now it has not occurred but but it surely can’t be dominated out. When the business continues to endure droop, producers will clearly take numerous value rationalisation programmes and worker value is among the many most vital ones, he added.

On gross sales of BS-IV autos, Wadhera stated the matter is sub judice however the auto business has requested the Supreme Courtroom to permit registrations of all such autos offered until March 31.