New Delhi: Auto industry body Siam has said that slowdown in economic growth and rise in fuel prices will impact demand for new vehicles in this financial year. It further expects the heavy trucks segment to remain down as high running cost due to expensive diesel and poor freight rates will weaken demand.
Siam, which has often raised concerns regarding taxation issues in the GST framework, said while there will be growth in vehicle sales during the second half of 201718, it will be on account of a weak base year in case of high-volume categories such as motorcycles as last year’s numbers were hit by demonetisation blues.
Abhay Firodia, president of Siam, said in a presentation that “slowdown in GDP” and “frequent changes in policies” are top concerns for the auto industry.
The industry has registered a growth of nearly 9% in the first half of this fiscal, but is now uncertain about the coming months as companies say that there had been a pre-ponement in purchases on fears of a duty hike under GST. “Also, the festive season has come in early this time around, in October, and we are not very confident of a strong retail showing in the latter half of the fiscal,” a senior official with a leading company said, requesting anonymity.
New models, attractive discounts and schemes have been major reasons for the growth in car and SUV segment this fiscal. However, concerns around the advent of electric mobility, which has meant lower focus on hybrids, has stumped carmakers such as Toyota, Maruti Suzuki and Hyundai.
A large section of luxury makers — that include companies such as Mercedes Benz, Audi and BMW — are also perturbed with the government for revising GST rates on bigger cars and SUVs upwards, which have led to an increase in prices. Siam said there may be a further slide as pre-ponement in purchases and rising fuel prices will impact numbers.
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