With almost all established vehicle manufacturers reporting sharp sales declines in August 2019, apex automobile industry body SIAM has once again reiterated the need for a GST reduction and also a vehicle scrappage policy.
According to Rajan Wadhera, president, SIAM, the sales reports of various companies for the month of August 2019 have been very dismal, with over 30 percent erosion of sales for passenger vehicles. 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.
The series of announcements made on credit availability and reducing the cost of credit do not seem to have percolated down to the non-banking financial companies, which 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.
On its part, the automobile industry has pulled out all stops in offering attractive deals and discounts to the consumers. However, the ability of the industry to provide large discounts is limited and this only highlights the need for the government to consider reducing the GST rates from 28 percent to 18 percent, which would significantly reduce the cost of vehicles and, in turn, create demand.
There is also an urgent need to come out with an integrated incentive-based vehicle scrappage policy covering all segments of the auto industry, said SIAM.
As the festival season has begun, it is imperative that these decisions are taken quickly to facilitate a recovery in the industry, emphasised Wadhera.