Amid the worst slowdown in the Indian automobile sector, Finance Minister Nirmala Sitharaman stated that the decline in auto sales is not due to just higher tax rates, but because of change in people's mindset. She said that millenials' preference for cab hailing services like Ola and Uber over paying EMIs for new cars has affected the sales performance of the auto sector.
Sitharaman was addressing the media in Chennai on NDA government completing 100 days of its second term. The Finance Minister also assured that the government is aware of the need to respond to the troubles in the auto sector.
The Finance Minister also assured that a decision on GST rate cut for vehicles will be taken soon. Facing its worst decline in sales since 1997-98, the automobile sector has been clamouring for measures to rejuvenate demand, including relaxation in GST rates.
The automobile sector saw its worst sales performance in August as it declined 23.5 per cent, the worst in the past two decades. In August 2019, overall sales stood at 18,21,490 units against 23,82,436 units in the same month last year. In absolute volume terms, sales have also fallen on a month-on-month basis since May when 20,86,358 units were sold. Since December 2018, year-on-year monthly decline in sales has been unabated.
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 last year.
Last month, FM Sitharaman announced a host of measures to drive lagging sales in automobile, including a scrappage policy, increase in depreciation on new vehicles for commercial fleet service providers, making loans easily available, and more. The Finance Minister had also assured that BSIV vehicles registered before March 31, 2020 would be allowed to run for their entire period of registration.