Everything the market gazers say about the once flourishing auto industry is not entirely a lie. Paradox after paradox comes with the constant fall in the sale of the passenger vehicles, two-wheelers and cars. Downward trends in the sale graph even compelled Digvijay Singh, a Congress party member in Rajya Sabha, to raise the crisis in the automobile sector with the required urgency. He ably pointed out that nearly 5 lakh cars and 30 lakh two-wheelers were kept unsold as inventories.
It would not absolutely be incorrect to say about the auto industry that it has come to a position today where it was not standing before. Looking up at the poor phase of the auto industry, it can emphatically be stated that there was every inch a need to revive the auto business by corrective measures. The difference in the sale of the units has been growing since the past two or more months.
Among various suggestive steps like GST rate cut, the introduction of vehicle scrappage, the revival of the Non-Banking Financial Company sector as sales are mostly dependent on the availability of finance, and delay in implementation of the proposed hike in the vehicle registration fee were required to be attended importantly.
Will the attentive cut in Goods & Services Tax rate revive the hopeless auto sector? Yes, it can definitely change the constant slump in the vital industry. Even a temporary cut would do wonders for the auto industry, opined Vishnu Mathur, the director-general of Society of Indian Automobile Manufacturers (SIAM). It is surely owing to this reason the Centre is likely to initiate a debate on lowering the rates on certain categories of automobiles in its 36th GST Council meeting. Though the exact date remains not finalised, there should be a decision on tax cut on certain automobiles from the current 28% to encourage people to buy vehicles.
He also mentioned that the revival package was essential to put a tight grasp on dwindling sales scenario and to bring back the auto industry on the growth path sooner.
According to data made available by SIAM, the sales have dropped by 18.71 %, the lowest in nearly 19 years. Vehicle sales including passenger vehicles and two-wheelers stood at 1825148 units in the month of July 2019 as against 2245223 units in July 2018. This large fall in the sales has clearly rendered as many as 15000 workers jobless over the past two-three months.
If we carefully read the figures for passenger cars sale in July this year, it stands worst since December 2000. At this time the segment declined by 39.86 percent. Domestic car sales were found to be down as a total of 122956 units sold in the month of July 2019 while in the same month of the year 2018 the total units of 191979 were sold from the showrooms. This decline was registered as 35. 95 percent. Commercial vehicles sale fell to 25.7% to 56866 units in July.
What worries the manufacturers most is the adverse effect on the GDP because of the blackness that has seeped into the automobile industry. This sector accounts for half of the manufacturing Gross Domestic Product.