News about the Indian auto industry going on a decline for the first time in ten years has been doing rounds for a long time now. According to a recent report, Praful Patel, Minister of Public Enterprises and Heavy Industries, has said that he would be taking the case of the auto industry forward. At a recently conducted event, Patel said that he would be making efforts to get a stimulus package by speaking to the Finance Minister and Prime Minister of the country.
On this development, Praful Patel, present at the 51st SIAM (Society of Indian Automobile Manufacturers Association) Convention, was quoted as saying, "There is a genuine case for stimulus for the automotive industry. We will have a negative growth this year. We are sure, if we don't get the support, it will be a setback for us." Apart from this, Patel said that he will be strongly advocating a reduction in the excise duty along with promoting the scrappage policy. Industry experts feel that if the scrappage policy is introduced, it would benefit the auto industry to a large extent as increase in the purchase of new vehicles would be an automatic consequence.
Giving a reassurance that the government understands the position of auto makers, he said, "There is a slowdown, sales are down, volumes are low, margins are thin and the sentiment is very negative. We are sympathetic to you, we have already taken up your case with the finance ministry we will show them that there is a case for stimulus."
Notably, the Indian auto industry experienced a fall of 2.08 per cent for the month of July 2013. According to statistics, sales of vehicles in all categories stood at 1415102 units in July this year as compared to 1445112 units in the corresponding period of 2012. Notably, the market for passenger cars in India during financial years 2011-2012 and 2012-2013 witnessed growth by 4 per cent and 2 per cent, respectively. However, after such a good performance, the auto industry has been suffering from a terrible slowdown. It must be noted that constantly rising fuel rates, interest rates and economic crisis have culminated into drastic reduction in sales.
Prominent personalities from the industry, including Chief Executive Officers (CEOs) and Managing Directors, have spoken about how corrective measures need to be taken by the government for damage control. Renault India's Executive Director for Sales and Marketing, Sumit Sawhney, strongly feels that the government should intervene before the crisis gets out of hand. Reiterating the stance of auto makers, he said, "It has been our longstanding demand with the government to announce the scrap policy for ageing vehicles and encourage new environment-friendly and fuel-efficient vehicles."
The poor condition of the Indian auto market can be reflected by the decline in sales of diesel cars and utility vehicles, two categories that registered a tremendous growth in the last financial year. What is more alarming is the fact that auto makers could not manage to stay afloat despite providing hefty discounts. Even though the festive season is approaching, firms are not projecting any sort of major turnaround in fortunes. "We are cautiously optimistic that we are going to see some improvement in the festive season, but in terms of the trajectory of that improvement, it is a tough call right now," said Lowell Paddock, the Managing Director of General Motors India.
