Booster doses, deep discounts fail to lift auto sector

Neither the series of growth-boosting measures by the government nor the interest rate cut could bring festive cheer to automobile companies.

Hyderabad: The sales data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday disappointed the industry observers. Automobile companies sold 2,23,317 vehicles in September 2019, which is a massive 23.69 per cent decline over 2,92,660 vehicles sold in the same period in 2018.

Comparison of Domestic automobile sales

In fact, sales of passenger vehicles, which form a major chunk of the total vehicle sales, declined for the 11th straight month.

It is also disappointing to note that the sales continue to decline despite a slew of measures announced by the key stakeholders i.e. the government and the corporate.

Growth Boosting Measures

In a series of growth-boosting measures in the last month, Union Finance Minister Nirmala Sitharaman tried to clear the air on the uncertainty surrounding the automobile sector.

Firstly, the Minister made it clear that the registration of BS-IV vehicles would continue to happen till 31 March 2020 and the government would take all the measures for the smoother transition to BS-VI.

Secondly, ahead of the crucial GST Council meeting in Goa on 20 September, the Government has slashed the corporate tax from 30% to 22% in the hope that the automobile companies would pass on the tax savings to customers.

Positive Response from Auto Companies

As expected, the automobile companies have cheered the government decisions and announced steep price cuts as high as Rs 90,000 on select models by Tata.

However, the sales data indicate that neither the reduction in prices nor the low-interest rates offered by banks (after reduction in the Repo Rate by RBI) couldn't bring the automobile sector on to fast-lane.

Booster doses, deep discounts fail to lift auto sector

Even the festive season that typically starts with Dussehra couldn't unleash the potential demand in the market.

Weak Consumer Demand

In response to a question after the September data, Sitharaman agreed, "..it is true that consumer demand has not revived for the automobile sector." She further said, " If any sector wants anything, in particular, they can always talk to me."

Interestingly, she made this comment on an election tour to India's major automobile-hub Pune.