Most automobile companies believe that these measures would help them perform better and will boost the morale of dealers and consumers

To address the slowdown of the automotive sector, the government announced a slew of measures recently. It has lifted the ban on the government departments from buying new vehicles and doubled the tax benefit for automakers. BS IV vehicles purchased till March 31, 2020, will remain operational for the entire period of registration.
The government has also announced additional 15 per cent depreciation on all vehicles, to increase it to 30 per cent, acquired during the period from August 23, 2019 till March 31, 2020.

The automotive industry has responded positively to the measures announced by the government. Most automobile brands believe, that these measures would help them perform better and will boost the morale of dealers and consumers.

The festive season is considered as the most crucial time of the year for automobile companies as the sales during this period usually see growth. However, in the last two years it hasn’t brought any cheer for the industry. Marketers expect the recent measures announced by the government will improve the market’s condition.

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.

Two-wheeler manufacturers in India believe these measures will provide immediate relief that the industry was seeking. “The promptness of this government’s response is reassuring for not just the industry, but also for the common man, 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.

However, auto expert Tutu Dhawan feels, it won’t make too much difference. “The main factor which is disturbing for the consumers is the announcement of electric vehicles, with the deadline till 2025, where two- wheelers make can only manufacture electric vehicles. This is hampering business makers about their investments done already. The biggest contributor to India’s GDP is the auto industry; one has to introspect on what has gone wrong. There has to be rationality on taxes.”

For the second time in the recent past automobile sales in India have witnessed the sharpest decline in nearly 19 years, dropping 18.71 percent in July. The previous biggest decline happened in 2000 when it fell to 21.81 per cent.