Economy

What’s causing auto industry slowdown? Millennials, among other things: FM Sitharaman

What’s causing auto industry slowdown? Millennials, among other things: FM Sitharaman”

The automobile sector in the country is facing the biggest slowdown in sales in almost two decades, with sales continuously falling for the past nine quarters. Ms. Sitharaman said the factors included the transition to BS VI vehicles, registration fees and also the mindsets of millennials.

Responding to a query on the industry's argument that tax cuts on automobiles can boost demand, Sitharaman said: "That is a very fine argument to give and I agree, but it is also a truth - and I am not negating anything that you are saying - that the automobile industry in India did have its good times at least till one-and-a-half years ago, till two years ago".

For the fiscal so far, passenger vehicle sales has declined by 23.54 percent at 11,09,930 units, commercial vehicles by 19 per cent at 317,061 units and two-wheelers at 15,14,196 units, 14.85 per cent less than previous year.

Addressing a press conference in Chennai, she said, "Automobile sector, in particular, has been affected by several things".

Finance Minister Nirmala Sitharaman has defended the dip in GDP growth to over six-year low of five per cent in April-June quarter terming it as "cyclical" and said that the fall has not impacted the people as the government has ensured the inflation remains below four per cent. The Finance Minister also assured that the government is aware of the need to respond to the troubles in the auto sector. She said that work is going on on the suggestions received from the industry for auto components. "I am not underestimating it and we are not sitting without responding to do something to boost it, to grow better", she said. Some studies show that millennials prefer not to commit to an EMI and instead prefer having Ola or Uber or taking the metro.

Carmakers have sought an immediate cut in GST on vehicles to revive sales during the crucial festive season, after auto sales declined for the 10th straight month.

Sitharaman said the government was working a package for the housing sector and would be announcing it "sooner rather than later". "Our full focus now is on how it will rise".

Also she lifted the ban on purchase of vehicles by government departments and allowed additional 15 per cent depreciation on vehicles acquired till March 2020.

While stating that bank mergers were announced for the banks to benefit from each other, the FM said the date of merger had to be decided by the boards of respective banks.



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