The Indian Automobile Sector | The Crisis Continues

The Indian automobile sector is facing a severe downfall in demand on account due to high GST rates, farm distress, stagnant wages and liquidity constraints. The critical auto-sector sales have shown signs of revival in September on account of depreciation benefits and heavy discounts.

Exclusive Report: Indian Automobile Sector Breathes A Sigh Of Relief | September 2019

Indian Automobile Sector Highlights

• New festive introductions have also been instrumental in the slight recovery the passenger and two-wheeler vehicle segment in a period of one month. While the Y-O-Y (Year-Over-Year) numbers significantly indicate the extremely cold nature of the market.
• In much recent interview the Finance Minister Smt. Nirmala Sitharaman had announced that several measures were being taken into consideration to the sector which included lifting the ban on the purchase of vehicles by the several government sectors and additionally allowing a 15% depreciation on vehicles bought till March 2020.
• Additionally, the immediate price reduction in the corporate tax rate to 25.17% from 30% for all domestic companies has helped deepen discounts and lure customers to build in some sales.
• As per leading sources in the Indian automobile sector, the moderated decline in sales on an M-O-M (Month-Over-Month) basis has been caused due to the wholesale adjustment.
• Since the dealership have been overloading for the last couple of months, Meaning that the dealerships have now stopped buying from OEM’s (Original Equipment Manufacturers) to reduce their stock pile-up.
• According to Shehdeep Bohra (Associate Director, Fitch Rating), “The recent rate cut and lower base effect will help the Indian automobile industry stabilize the Y-O-Y auto sales in the month of October. What is important is to pass on the interest rate cut to the customers. New launches ahead of the festival season, including the BS-6 compliant variants, are also going to support the sales momentum.