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Auto slowdown: Incentive-based scrappage policy will revive demand, says SIAM

Updated : December 10, 2019 01:05 PM IST

The Society of Indian Automobile Manufacturers (SIAM) released its sales data for November, recording a 12 percent month-on-month decline in sales. Rajesh Menon, the director general of SIAM, shared his views on the auto sector in the country in an interview with CNBC-TV18.

“Last time we saw such a severe slowdown was in 2013-2014, that was a period we saw such a severe slowdown for such a long duration. As mentioned earlier, we are seeing the challenges continuing. We are seeing bit of marginal decline, a negative growth in the passenger vehicle segment. The negative growth trend continues and the challenges of course are still there.”

>> Sales decline 12% in November after brief festive season respite

On rural demand he said, “Two-wheelers showing a minus 14 percent degrowth is largely attributed to rural demand. We are yet to see a revival in rural demand. Commercial vehicles, I would also say it is because of infrastructure projects. That is a clear indicator, we have more infrastructure projects coming up in the economy you will see commercial vehicles growing. So commercial vehicles also showing degrowth of 14 percent clearly indicates that we are still yet to see infrastructure projects picking up to the desired levels.”

He added that SIAM will continue to ask the government to reduce the goods and services tax (GST) slab for automobiles in a bid to spur demand.

“We had made a request in the past on lower GST, we continue to advocate for a lower GST slab because we are not really a sin good, 28 percent is sin good so in that sense we would continue to advocate for a lower GST," said Menon.

However, he said that the industry's primary focus is on scrappage policy that will incentivise owners to buy new vehicles.

“More importantly we want to focus on scrappage. We are looking at a scrappage policy which is incentive based. How do you incentivise a consumer to scrap his old vehicle and buy a new vehicle. We are in touch with the ministry of transport for an incentive-based scrappage policy and finance minister also referred to it in a press conference in September. We are hopeful that we will have a good incentive-based scrappage policy announced which will revive demand without any doubt," he added.
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