Indian Auto Industry Hopeful for 2020-21

  • 2019-03-12 12:00:00
  • Reporter

As it recovers from an unprecedented slowdown in 2019, the Indian auto industry is looking for a turnaround in the next financial year, which will see the launch of a range of new and upgraded models and during which the economy is expected to rebound. The challenges ahead include the transition to stricter emission norm BS-VI from BS-IV and compliance to new safety norms, which will raise the cost of vehicles. Auto makers need to be fully compliant with the BS-VI norms by April 1, 2020. All segments of the Indian auto industry have been dealing with a slump and the industry is expected to close 2019-20 down 13 to 17% in wholesale dispatches, compared to the previous financial year. Many auto manufacturers dealt with operational hardships and were forced to re-evaluate their production plans, due to the significant fall in sales. Around 350,000 people lost their jobs in the Indian auto industry due to the slump, including dealerships and in the auto components sector. SIAM (the Society of Indian Automobile Manufacturers is expecting a rebound in the coming financial year. SIAM president Rajan Wadhera pointed out that the country’s economy is expected to revive early in 2020, which along with the low base of 2019-20, and the launch of newer models, should support growth in the auto sector. He added that in 2020-21, the implementation of BS-VI norms will lead to the clearing of all old inventory, building up new inventory and making available new BS-VI compliant vehicles in the market, which should drive production and sales. Since compliance with these new norms could raise vehicle costs by 8 to 10%, SIAM has submitted to the government to lower the GST (General Sales Tax) for vehicles from 28% to 18%, and also to introduce an incentive-based scrappage policy for vehicles. Kenichi Ayukawa, managing director and CEO of India's largest carmaker, Maruti Suzuki India Limited, is also hopeful that 2020 will be a better year for the company as well as for the industry at large, while Hyundai Motor India MD and CEO S S Kim anticipated that demand will rise gradually from the second half of 2020, once customers understand the new norms. Echoing this sentiment, Gaku Nakanishi, the president and CEO of Honda Cars India, also felt that the country’s auto industry had already hit bottom in 2019. Tata Motors managing director and CEO Guenter Butschek revealed that the spending on the BS-VI transition has been the single largest investment for the company which will start rolling out new BS-VI products from January 2020. The forthcoming Auto Expo 2020, to be held from February 5 to 12 in Greater Noida, near New Delhi, is expected to reveal new clean vehicles, keeping in mind the BS-VI norms, as well as electric, hybrid and connected vehicles. A total of 60 new launches and unveilings of vehicles are expected at the event, where MG Motors India, China's Great Wall Motor Company and First Automotive Works (FAW) will make their debut appearances. India’s auto industry will be represented by Maruti Suzuki, Hyundai, M&M, Tata Motors , Skoda, Volkswagen and Kia, while Honda, Toyota, Lexus, BMW, Audi, Ford, Jaguar Land Rover and Volvo, along two-wheeler majors Hero MotoCorp, Bajaj Auto and TVS Motor Co. will not be exhibiting,

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