Auto industry welcomes Finance Minister’s revival package: Measures likely to boost demand

Measures to revive the auto sector which is currently going through one of its biggest slowdowns come within 2 weeks of the consultation of the Finance Minister with the industry.

By: | Updated: August 24, 2019 1:03 PM
auto sales in june 2019, PV sales in june 2019, car sales in june 2019, big blow for auto sector, all vehicle categories sales in june 2019, SIAM (Image Credits: Reuters)

Finance Minister, Nirmala Sitharaman, in her media address yesterday announced various measures to curb the ongoing difficulties in the Indian automotive sector. The specific measures taken in order to boost the demand have been welcomed by the auto industry. Society of Indian Automobile Manufacturers (SIAM) President, Rajan Wadhera said that the industry appreciates that the FM has responded with a package of measures within 2 weeks of its consultation with the industry.

The list of measures includes continued registration of ICEs and EVs in future. Also, FM has cleared that BS-IV vehicles purchased till 31st March 2020 will continue to be operational for their entire period of registration. Furthermore, the ban on the purchase of vehicles by government departments has now been lifted. Also, the government is soon to bring in a scrappage policy for older vehicles. Vehicles purchased before 31st March 2020 will be liable for 15 per cent higher depreciation. The revision in the registration fees of vehicles has also been postponed until June 2020.

Based on the announcements made by the Finance Minister, here are the quotes various major automobile manufactures in India:

Venu Srinivasan, Chairman, TVS Motor Company said “These measures will provide the immediate relief that the industry was seeking. The promptness of this government’s response is reassuring for not just industry, but for the common man as well because it’s putting liquidity into the market and easing the squeeze on the small and medium sector. While there are indications of a global slowdown, this government has demonstrated its resolve to mitigate the impact of that in India through these measures. This is the stability and proactiveness that industry wants.”

S S Kim, MD &CEO, Hyundai Motor India Ltd said “We welcome the Government’s measures to boost the economy and automobile sector in particular. We are optimistic that this move will boost the customer sentiment in the current market scenario and encourage customers acquisition of car in the coming festival season”

Rajesh Goel, SVP and Director, Sales and Marketing, Honda Cars India Ltd. said “The measures announced by the government will definitely instil a positive sentiment both among consumers and dealers, thus helping to improve retail, wholesale and overall purchase pattern in the sector. The clarification on the validity of BS4 vehicles and the future of Internal Combustion vehicles, in addition to deferring proposed vehicle registration fee hike, will help to address the issue of postponement of purchases and customers will buy BS4 vehicles. The additional 15% depreciation benefit will catalyze the retail demand through buying by businesses and corporates. We are hopeful that such measures by the Govt. will provide an impetus to the industry.”

Charles Frump, Managing Director, Volvo Car India said “ Today’s announcements by the government will rejuvenate the economy through a flow of credit and revival of consumption. The government has clearly signalled full support to the automobile industry which is reeling under a prolonged slowdown for more than 12 months now. The decision to allow a higher depreciation on cars, interest rate cuts and BS4 vehicles to run their life of registration will boost demand for the industry. The speed with which the government has responded after meeting various representatives of the industry is also highly appreciable.”

Nagesh Basavanhalli, MD & CEO, Greaves Cotton Limited said "Government's slew of measures announced yesterday is a timely step and it will provide the much needed boost to revive the automobile and allied sectors. Relaxation on sale of old BS IV vehicles, equal impetus to ICE and EV growth along with bank recapitalization and passage of repo rate benefit to customers will improve market sentiments and we will start seeing the positive impact on the automobile industry. Time bound credit of GST refunds and streamlining of KYC norms for NBFCs will also improve the liquidity situation."

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