Thursday 13 February 2014

Vote on Account 2014: Carmakers seek tax incentives as sales dip for 4th straight month

GREATER NOIDA: The Indian automobile industry on Tuesday sent out an SOS to the government seeking tax sops after reporting the fourth straight monthly fall in domestic car sales in January.
Amid the glitz and glamour of the 12th Auto Expo that drew to a close on Tuesday after attracting a record 5.5 lakh visitors, the Society of Indian Automotive Manufactures (SIAM) said the industry sold 1.6 lakh cars last month, 7.6% less than January 2013.

"There has been no respite for the past many months. Despite all the high discounts and freebies the industry continues to be in a negative," Sugato Sen, deputy director general at SIAM, said. "We have asked the government to go for uniform taxation structure and remove the variable excise duties levied on passenger cars. We are hopeful that the government will give us some sops in the budget next week," he added.

The situation is worse in the case of heavy commercial vehicles, which recorded year-on-year fall in sales for the 23rd straight month in January when it sold 15,769 units, 17% less than a year earlier.



 Heavy industries minister Praful Patel has already written to the finance ministry, seeking reduction in excise duty on commercial vehicles to 8% from 12%. At present, automobiles attract excise duty ranging from 12-30%, SIAM said.

Industry watchers expect the hard times to continue well beyond the installation of the new government in the Centre after the general elections in coming months, as consumer sentiments remain negative. "Continuing higher interest rates and fuel prices are again denting consumer sentiments leading to sluggish demand both in passenger vehicles and commercial vehicles," Amit Kaushik, principal analyst (autos) at IHS Automotive, said. "We expect market to remain weak until the country recovers from the political precariousness," he said.

Sales of sports utility vehicles and multi-purpose vehicles fell 6.2% year-on-year in January while van sales slumped by 32% as top companies posted negative sales. Market leader Maruti Suzuki posted a 6.88% decline in its domestic sales at 82,461 units in January while No. 2 Hyundai Motor India sold 33,351 vehicles, 2.61% less than January last year. Tata Motors' car sales plummeted 24% to 8,463 units in January.

Two-wheeler sales, meanwhile, continued to stay positive. Sales of motorcycles rose 4% in January to 922,323 units while scooter sales jumped 28% to 323,162 units.
SIAM's Sugato Sen attributed the boom in two-wheeler sales to a strong monsoon from last year that led to a bumper harvest season in the farms and a surge in rural economy.

Rising farm incomes, however, was not felt on sales of trucks and buses, which fell 20.9% in January. "It had an impact on commercial vehicles as well though that is not as significantly visible in the sales numbers and the increase in freight movement," Sen said. "We are hoping that a record crop increase expected in the country would give that much needed fillip to truck sales," he added.

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