In realization to facts related to drastic slowdown in Auto Sector over past couple of financial quarters our FM Nirmala Sitharaman on behalf of Indian Government have finally announced few important as well as genuine reforms.
Major Announcements
All BS IV vehicles purchased upto 31st March 2020 will remain operational for their entire period of Registration.
Registration of BS-IV vehicles beyond March 31, deferring of one time registration fees till June 2020.
Additional 15 percent depreciation will be allowed on vehicles acquired from now till March 2020 making the depreciation on all vehicles 30 percent which is double from earlier.
Lifted the ban to purchase new vehicle by all government departments which has been followed since 2014.
Also promised that government will consider measures, including a scrap-age policy to boost demand.
Most of the Brand Heads have welcomed the decision warmly:
“The announcements made today show that the government is listening to industry’s problems. These will bring positive sentiment in the short term. But, the biggest takeaway is that there are a number of measures to achieve, which will make long-term workings of the economy and various branches of the economy far easier than what it is today, I think one of the biggest things she’s announced is the business of paying government bills on time and putting in a mechanism for that. ” RC Bhargava, Chairman, Maruti Suzuki India.
“We welcome the government’s measures to boost economy and the automobile sector in particular. We are optimistic that this move will boost customer sentiment in the current market scenario and encourage customers’ acquisition of cars in the coming festival season”. S S Kim, Managing Director and CEO, Hyundai Motor India Ltd.
“The announcement today will go a long way in improving sentiments because it shows that the government is listening to the industry. I think the financing concerns have been more or less taken care of by the announcements. Not much for reducing transaction cost but several other measures that will incentivise vehicle purchase and also remove some of the unfounded fears such as BSIV vehicle registration.” Pawan Goenka, Managing Director, Mahindra & Mahindra.
What Went Wrong?
We really need to understand the facts behind this downfall of Auto Industry over the last financial quarters. As per the financial growth planning by our present Indian Government & Auto Industry, the automotive sector is expected to generate up to $300 billion in annual revenue by 2026, contributing over 12 per cent to the nation’s gross domestic product (GDP) and creating 65 million more jobs from 2016-2026
1) Deadline To Deliver Cars Powered By BSVI Engines
The declared deadline of 31st March, 2020 to stop selling BSIV engine powered vehicles was informed timely to OEM's & the general public too to avoid hassle in the last moment the way it occurred at the time by scrapping of BSIII engines.
Now considering the deadline OEM's stopped the manufacturing of BSIV & focusing on selling the piled up stock which is not moving. Wherein it becomes important to check details that why the projection by major volume brands like Maruti Suzuki, Mahindra & Mahindra, TATA Motors & Hyundai India is failed.
2) Transition Towards Plug-In Hybrid & Electric Vehicles Globally
We are aware of this revolutionary transition but we are moving at a lower pace as compared to the world & specially China where every second car sold today is an EV.
Global sales of battery electric cars increased 73% in 2018 to 1.26 million units, after already jumping 86% the year before. That means worldwide sales of EVs jumped more than threefold in just two years time. Of course these are all new records as the market for electric cars is still in its infancy and has plenty of room to grow in coming years. China alone is contributing 60% globally in purchasing EV's. Wherein being aware neither OEM nor consumer from India are listed anywhere in the following chart which the number of units sold from Jan 2019 till May 2019 as per Insideevs.com.
Now knowing all of this we are still not acting on it & are on standstill. Hence, manufacturers offering diesel & petrol cars are feeling all the heat.
3) New Launches of Midsize SUVs With Futuristic Infotainment, Beautiful Designs & Reasonable Price
The upcoming brands in India like KIA & MG did their homework on target area wherein they knew that present brands are just enjoying monopoly without offering much to the clients. Let's take a look on what is attracting the clients these days where whole nation knows that Indian Auto Industry is struggling but still MG Hector gets 21000 bookings starting price (INR 12,18,000.00) & Kia Seltos gets 35000 bookings with starting price (INR 9,69,000.00) making all brands run for their money.
MG Hector
Panaromic Sunroof
Voice Command for almost all functions
iSmart Internet Connectivity
10.4" Touchscreen Infotainment Screen with music system from Infinity
Sleek Design Dynamics with attractive LED Headlamps & Fog Lamps
Kia Seltos
HeadUp Display
10.25" Touchscreen Infotainment System with BOSE music system
Ventillated seats
Sleek Design Dynamics with attractive LED Headlamps & Fog Lamps
UVO Connect with 37 features on mobile
4) Ban On Government Bodies To Buy Vehicles With BSIV Engines
The official memorandum released on August 6, 2014, said that officials are also allowed to buy new vehicles costing up to Rs. 4.75 lakh, until the old ones complete their required life cycles. Back then, the government had also said that the new vehicles may be purchased only through DGS&D (Directorate General of Supplies and Disposals) rate contract mode.
It has made a huge impact on the Automobile industry leading to this situation as one of the major factor.
5) Registration Validity Of 10 Years On Diesel Vehicles In Delhi NCR With No Organized Scrapping Policy
In India, car scrapping is not an organised activity like the sale of used cars. Old cars have been contributing a lot to the pollution woes in Delhi NCR. Recently, there was a National Green Tribunal order that banned the use of diesel cars that are older than 10 years & petrol cars that are older than 15 years in Delhi. The Regional Transport Offices (RTOs) have stopped re-registering these vehicles and checking their fitness. Until now, there has not been any uniform policy for old vehicles. The impact of the National Green Tribunal order may be detrimental to car owners, as they may not be aware of the formalities of dealing with an aged vehicle. When it becomes illegal to operate such a car on Indian roads, what could they possibly do with it?
Car owners have the option to sell or transfer their vehicles to a neighboring state before their Registration Certificate (RC) expires. It is important that this is done before the expiry of the RC, as the RTO will not renew the RC after the car completes stipulated 10 years & 15 years for diesel & petrol respectively. When a car is transferred to another state, it will have to be re-registered at the new RTO, and this registration has to be updated in the records of the old RTO. Otherwise, there is always a risk of the car being used for illegal activities. Car scrapping is an option in front of a car owner who is not keen on transferring the vehicle to another state.
DATSMYCAR VERDICT : Its time to think rationally towards our buying preferences from taking advantage of offers all brands are offering in this temporary slowdown. Not to wait to get hands on the future EVs because ultimately EVs will take over Diesel & Petrol Cars but slowly & gradually.
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