The automobile industry slowdown in India might finally be relieved as Finance Minister has urged for cheaper loans, postponing increment of registration fee and much more!
The automobile industry has been through a tough slowdown for about a year now due to ever plummeting sales. That in turn has resulted from poor customer sentiments because of high interest rates on automobile loans, increased costs and registration fees and much more. Finally though, the government has stepped up to make a few announcements to help the situation. Let’s look at them closely and see how the industry has reacted to it.
First of all, the government has requested for cheaper automotive loans. Finance Minister Nirmala Sitharaman has urged banks to reduce interest rates on auto loans so people are encouraged to buy cars. Another major setback has been the BS-VI emission norms which are set to be effective from April, 2020. The government has now announced that all BS4 vehicles purchased before 31 March 2020 can be used till their respective registration period ends.
Not only these but Finance Minister Nirmala Sitharaman has announced several other measures to revive the auto industry. These include postponing the increase in vehicle registration fee to June 2020, higher depreciation for vehicles purchased till March 2020, and a new scrappage policy for cars older than 15 years.
The automobile industry has of course reacted very positively to the efforts the government has shown to revive sales. Martin Schwenk, the Managing Director & CEO of Mercedes Benz India said, “We welcome the firm measures announced by the Finance Minister today. The host of positive measures announced has given the much required boost to the auto sector and also sets a clear roadmap. We are confident that these measures once implemented, will support growth and drive demand for the auto sector.”
Rajesh Goel, Sr. Vice President and Director, Sales & Marketing, Honda Cars India Ltd said, “The measures announced by the government will definitely instill a positive sentiment both among consumers and dealers, thus helping to improve retail, wholesale and overall purchase pattern in the sector.” He also believes that postponing the increment in registration fee will encourage customers to buy BS-IV vehicles and the additional 15% depreciation benefit will catalyse the retail demand through buying by businesses and corporates.
The industry had been seeking relief from the government for a long time, asking for reduction in GST rates and other measures. About 2.3 lakh people have lost their jobs in the process and several automobile factories had stopped production for days. The government already announced considerable GST reduction for EVs and several other benefits to EV buyers some time ago to advance the case of EVs in the country. Now, with these new developments, the automobile industry might as well recover from its slowdown.