SIAM: Proposed hike in vehicle registration cost will badly hit industry

After nine months of slowdown, the Indian automobile market has a new challenge to contend with. This time it is about the MoRTH-proposed (and massive) hike in new vehicle registration.

Therefore, it is not surprising that the apex industry body Society of Indian Automobile Manufacturers (SIAM) has expressed serious concern on the recent draft notification issued by the Ministry of Road Transport & Highways (MoRTH), which proposes an increase in registration charges of new vehicles by 10 to 20 times (depending upon the vehicle category) more than the current costs.

Under the proposed rules, new medium-duty goods/passenger vehicles will attract a Rs 20,000 registration fee instead of the current Rs 1,000 (up 1,900 percent). A new truck or a bus will see a fee of Rs 20,000 instead of the current Rs 1,500 (up 1,233 percent). The registration charge for a new two- wheeler is proposed to be Rs 1,000 in place of the current Rs 50 (up 1,900 percent). Similarly, the registration fee for a new car is proposed to be Rs 5,000, up from the current Rs 600 (up 733 percent).

While new vehicle sales are reeling under the downturn, sales of used vehicles will also bear the brunt. In fact, the proposed vehicle renewal registration fees are up a whopping 3,900 percent for motorcycles!

Given that sales of new vehicles have plummeted significantly over the past nine months – the ongoing and unprecedented slowdown that has brought the industry down to its knees – any hike in vehicle registration fees will only serve to deal a body blow to the automobile industry, and in turn to the country, considering in Indian automotive market is a major contributor to the country's manufacturing GDP and overall GDP, alike.

Commenting on the proposed hike, Rajan Wadhera, president, SIAM said, “Such an increase in the registration charges of new vehicles would further aggravate the market condition negatively.”

SIAM has suggested that instead of hiking registration charges for new vehicles, the government of India should first look at implementing the various measures suggested by SIAM to revive growth in the domestic automotive industry.