Like the last quarter, firms will focus across its value chain to ensure smooth transition to BS-VI
Sector snapshot
The FY20 year-to-date (April to December) domestic sales volumes in all vehicular segments witnessed a sharp decline with passenger vehicles and commercial vehicles reporting 16% and 21% drop, respectively. The key reason is subdued customer demand due to liquidity crunch and higher cost of finance and insurance. Like the last quarter, firms will focus across its value chain to ensure smooth transition to BS-VI.
Key challenges
Higher upfront cost: Customers are required to pay a higher upfront insurance premium for two – wheelers and four – wheelers and hence, sales volumes have dipped in these segments
Shift to BS-VI: The shift to BS-VI by April 2020 will be challenging for automakers as it will result in price increase which is likely to adversely impact demand
Liquidity crunch: The demand was impacted due to squeeze in the NBFC financing
Industry expectations
Reduction in GST rate applicable to automobiles to 18% from the current 28% to absorb the extra price impact of shift to BS-VI A cut in personal income tax rate will provide more disposable income in the hands of consumers, which could lead to automotive demand recovery…Keep Reading
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