Finance Minister Nirmala Sitharaman rightly said that millennials today prefer to take Ola, Uber and public transportation instead of committing to pay hefty EMI (equated monthly installment) for buying an automobile.
Owning a car in a city is an expensive affair. Instead of losing sleep over insurance, parking, traffic and increasing petrol prices, millennials prefer low cost and convenient transportation methods.
However, blaming the ‘Uber Generation’ for the automobile sector for the crisis in the country’s automobile sector is nothing but a lame excuse. As per several reports, the automobile sector is facing the worst slump in more than two decades. The sector has witnessed the worst double-digit fall in sales for two and four-wheeler manufacturers. Over 70 per cent sales drop have been recorded in the truck and bus maker companies. Have millennials also stopped buying trucks like they used to do in the past, Minister? She also said that move to Bharat Stage (BS) VI emission norms from 2020 has also affected the sales.
With the festival just around the corner and to arrest the skidding sales, the carmakers have sought an immediate cut in GST (Goods and Services Tax) on vehicles. The carmakers believe that a cut in the tax would help attract the buyers which will help in reviving the sales. The automobile industry has asked for a cut in a GST rate from 28 per cent to 18 per cent. However, the government doesn’t seem to be keen to accommodate the appeal.
As per reports available online, the passenger vehicle industry suffered its worst-ever monthly sales performance in August 2019 since 1997-98. The automobile sales in the country declined by 23.55 per cent in August 2019.
According to a report by the Society of Indian Automobile Manufacturers, the overall passenger car sales dropped by a significant 31.57 per cent in August 2019. Only 115,957 passenger cars were sold in August this year as compared to 196,847 sold in August 2018. The drop in sales also resulted in huge job losses.
In a damage control move, the finance ministry announced several steps to revive the automobile industry. The government urged the banks to make auto loans cheaper and increase credit availability to non-bank lenders, instructed the government agencies and departments to replace old vehicles and so on.
If the trend continues, it will not only spell trouble for the carmakers but also for the banks that have been purchasing car loans. The popularity of the app-based car may have led to the decline in the sales to an extent but the biggest factor behind the fall is said to be the liquidity crunch, high-interest rates, stricter security, high registration cost and demonetisation.
As per reports, India’s gross domestic product growth slowed down to five per cent. Some problems need to be addressed on a war footing. Or else, deeper trouble lies ahead for Union Finance Minister and automobile industry.
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