Auto Sales Plunge

Automobile sales across categories recorded their steepest decline last quarter as production as well as sales were severely impacted by the Covid-induced lockdown, prompting industry body Society of Indian Automobile Manufacturers to make a renewed case for a GST cut on vehicles to generate demand.

Passenger vehicle sales fell for the ninth straight quarter by 78.43% to 153,734 units in April-June 2020, Siam data showed. Sales of commercial vehicles declined for the fifth consecutive quarter by 84.81% to 31,636 units in the same period. Meanwhile, two-wheelers slid for the sixth straight quarter by 74.21% to 1,293,113 units in the period under review.

Automakers in India report wholesale dispatches from factories and not retail sales made to customers.

Holding that the current slowdown is the deepest and the longest the industry has seen in the past two decades, Siam president Rajan Wadhera said the industry would continue to engage with the government for incentives to recover volumes, which are expected to tank by 26-45% across segments in the ongoing fiscal year. Automobile sales in the local market dropped by 9-29% in FY20.

Siam has urged the government to temporarily reduce GST rate by 10% across all categories of vehicles. The incentive for the scrappage scheme could be generated in the form of 50% rebate in GST, road tax and registration charges, Wadhera said The auto industry with an expected profitability of around 3-9% is not in a position to offer discounts anymore for scrappage incentive.

Additionally, the industry body has recommended the introduction of an incentive-based vehicle scrappage policy and a procurement programme backed by adequate funding for diesel and CNG buses by state transport undertakings to boost demand.

Wadhera said while automakers have resumed production, it has not been smooth due to supply chain issues owing to continued restrictions in some places where supplier factories are located, non-availability of labour and delays in clearing of import consignments, besides Covid-19 cases emerging in and around production sites of some member companies. Wholesale is therefore lagging retail.