[johannskaria]

We all are on the forum because of our love for cars/bikes . so thought this would be good forum to compile the to-do list for the Government to help the auto industry to overcome this economic slump caused by this pandemic and help in restarting our economy.



Here are some ideas government can consider for the same :-

Government can
1. Fast track the implementation scrappage policy by considering the vintage and classic car culture in our country.
2. Bring forward the unified one road one tax
3. Fast track the implementation of IRDA sandbox ideas
4. Increased R&D tax benefits to push for innovation in our country
5. Incentivise and promote new methods of acquiring vehicles like leasing
6. Reconsider the classification of automakers in the sin goods category



what else can be done by our government (both federal and state) and other stake holders like the manufacturers and even the dealerships to help us restart our economy?

[turbo]

There's no need for those.

Both Maruti and Kotak think that the industry will actually see an increase in sales once the lockdown ends because a large number of people will avoid taking public transport due to fear of community spread of diseases.

And they might have a point. I mean my dad was the biggest proponent of "why drive, take the volvo, sleep all the way", and now he says "take the car".

Needless to say, I'm not complaining.

[zaks]

One thing that will help them is to give them more time to clear the BS4 inventory due to lockdown, etc.

[Sahil]

#2 - uniform one nation road tax, there is no better time to do this. If not done this year, I don’t think it’s ever happening then. I think states had agreed to close to 8-10% of uniform RTO tax. I think until 2022 they should make it a flat 5% or so to boost the auto industry and then gradually raise it by 1% over the next 3-4 years

This will also boost the used car market as inter state cars can be sold more easily without worry about regn state mark and would be easily transferred to the new state.

[arakhanna]

Originally Posted by turbo

There's no need for those.

Both Maruti and Kotak think that the industry will actually see an increase in sales once the lockdown ends because a large number of people will avoid taking public transport due to fear of community spread of diseases.

I think this more bluster and hope by Maruti than a definitive prediction.

In urban India especially, sales of 4W's were stagnating even before the Wuhan virus. One key reason is traffic but the other one is parking availability. Both of these reasons are not going away. I think that auto sales while initially may jump once things normalise to make up for lost sales, in the medium term sales will head downwards. The hit to the economy and hence to affordability will outweigh the fear factor in choosing to purchase a 4W for personal safety. Job losses unfortunately will be high and availability of credit will be low.

In rural India, availability of public transportation was always suspect. Penetration of 2W's is high and while sales of 4W's will continue to grow, I think the impact of the faltering economy will also play its part here.

My best guess is that FY22 or maybe FY23 sales will be similar to FY19. That also because of the one positive factor for new 4W sales coming from the aversion to pre owned vehicles. Hence people may downtrade to factory new, which could help Maruti in terms of entry vehicle sales.

The future is very uncertain at this point of time. But yes, safety first as a theme is definitely going to play out, not sure if 4W sales growth is the way forward though.

My suggesting to the Government would be to cut the tax. From GST of 28% plus cess to excise and customs duty on fuel, we seem to pay an absurdly high of taxation. This is one way to drive consumption by playing on the elasticity of demand however weak.

[humyum]

The only thing that can revive the auto industry in such cash crushed times are

1) Reduce Road Tax, effectively decreasing the on road price of the car
2) Reduce GST, XYZ whatever they add and reduce the on road price of the car
3) Remove the Sub-4 meter rule
4) Reduce Petrol/Diesel prices to where they need to be with crude at 27$ today, stop the thuggery of artificially controlling prices and still calling it deregulated
5) Increase the tax ceiling from 5 to 10 lakhs of no tax and then 10% after that till 20 lakhs and bring all the deductions back in, let the middle class have money in their hand to buy

Industries will prosper when people have money in hand, not when the population is taxed to death, we need proper economists to run this country even more now and not just so called 'desh bhakts'. I think the auto industry is not going to revive one bit even after the covid thing is over as people would want to keep their money with themselves for days like these than spend it on cars which however you look at it is still considered a luxury.

I for one wanted to buy a car as I drive a 11 year old Swift, but now I will just keep running this. I know a couple more of my friends who were going to be first time car buyers soon but they have just dropped the idea and will use Ola/Uber/Rick instead.

[Turbanator]

If we look to any of the Developed countries, they do not consider Automobiles as Luxury but as necessity. Unfortunately, in India, we consider as otherwise and by successive governments. Going forward, I don’t think anyone should even dream about lowered taxes, whether it is RTO or GST. We don’t have the people in legislation who think for the middle class.

Instead of uniformity, don’t get surprised if the state Governments add some COVID surcharge in coming weeks. In next few months, I don’t think, everyone is going to office as in the past. There will be massive retrenchments and whosoever is left, will come rotationally.

Some Industries will see a major blip, Air, Tourism, Hotels, Automobile and service come to my mind. If you close Call centres for a foreign company With Zero notice, they will not give you the same business again. Had we closed things gradually, things might have been different. Yes, we would have seen higher cases, but controlling things would have been easier at a later date. Heck, we don’t even close a server abruptly and do a planned shutdown and here we just pulled the plug of the whole country.

Automotive industry adds a major chunk to GDP, and the ancillaries connected with this industry is very large. Not only there will be a lack of demand, but the Industry will face higher taxes. Adverse Foreign exchange will add to the woes.

This can change if the Government encourages domestic production of everything wherever possible. We are too much dependent on Imports, especially from China. But given the way Chinese works, I am not sure if local businesses can compete. It will take a lot of efforts from the Government side to put barriers- high customs/ negative list etc.

[MCR]

I feel any reduction in Road tax will prompt the Auto makers to increase the base price of the car. We have already seen this happen once during the GST introduction.
Most of the companies have incurred heavy losses in the last few weeks and the Capitalistic mindset would be to reap as much as possible.
Its better to look at other means like cheap loans, reducing the excise duty on fuel, Reducing the GST on Insurance etc.

[turbo]

Originally Posted by humyum

The only thing that can revive the auto industry in such cash crushed times are

1) Reduce Road Tax, effectively decreasing the on road price of the car
2) Reduce GST, XYZ whatever they add and reduce the on road price of the car
3) Remove the Sub-4 meter rule
4) Reduce Petrol/Diesel prices to where they need to be with crude at 27$ today, stop the thuggery of artificially controlling prices and still calling it deregulated
5) Increase the tax ceiling from 5 to 10 lakhs of no tax and then 10% after that till 20 lakhs and bring all the deductions back in, let the middle class have money in their hand to buy

Industries will prosper when people have money in hand, not when the population is taxed to death, we need proper economists to run this country even more now and not just so called 'desh bhakts'. I think the auto industry is not going to revive one bit even after the covid thing is over as people would want to keep their money with themselves for days like these than spend it on cars which however you look at it is still considered a luxury.

I for one wanted to buy a car as I drive a 11 year old Swift, but now I will just keep running this. I know a couple more of my friends who were going to be first time car buyers soon but they have just dropped the idea and will use Ola/Uber/Rick instead.

I have a different perspective. I think the slowdown in sales was due to the rapidly approaching BS6 norms, and the lack of any new exciting launches, with all the manufacturers waiting for the BS6 fuel availability to launch their products.

There was only one BS6 product, and that was Seltos, and look how well it sold. Nobody else took the opportunity of an early move to BS6 with a facelift. Now the Bs6 Creta's here, the Bs6 Verna's here, just wait and watch the Seltos market share erode.

Also I'm a little unsure as to how removing the 4m rule would help. Could you please elaborate a little?

People will prosper when industries will prosper, and governments should think of industries, not make unnecessary regulations to control them is a very Republican line of thought. And its kind of odd that you find a problem with this government, which has always been considered as pro-business. I mean if you are this annoyed with this government, wonder what you will do when (if) the Left parties come to power, and all the industries control shifts from the owners to the Labour Unions, like a Marxist utopia.

And lastly, I agree with your final paragraph. I too have a 13 year old Getz petrol thats doing absolutely fine, and I'll trade it for a 2022 Mahindra Scorpio (assuming it is ladder on frame), and keep that one till 2037.

[johannskaria]

Originally Posted by turbo

Both Maruti and Kotak think that the industry will actually see an increase in sales once the lockdown ends because a large number of people will avoid taking public transport due to fear of community spread of diseases.

Yes and no,
well yes it will have a short term effect but the weak economic sentiment may weigh it down.

Originally Posted by zaks

One thing that will help them is to give them more time to clear the BS4 inventory due to lockdown, etc.

A proportional number of days may help the dealers.
But many of them have already registered the cars in their own names to sell them later or in the name of their leasing companies.
The dealers ere ell prepared hen compared to the earlier emission change.
So we may not have that much of an issue.

Originally Posted by Sahil

#2 - uniform one nation road tax, there is no better time to do this. If not done this year, I don’t think it’s ever happening then.

This will also boost the used car market as inter state cars can be sold

Couldn't agree more.
It eases the migration of professionals across boundaries easily.
A unified tax systems ill also prevent 'car tax heavens' too.

Originally Posted by arakhanna

My suggesting to the Government would be to cut the tax. From GST of 28% plus cess to excise and customs duty on fuel, we seem to pay an absurdly high of taxation. This is one way to drive consumption by playing on the elasticity of demand however weak.

Originally Posted by humyum

1) Reduce Road Tax, effectively decreasing the on road price of the car
2) Reduce GST, XYZ whatever they add and reduce the on road price of the car
3) Remove the Sub-4 meter rule
4) Reduce Petrol/Diesel prices
5) Increase the tax ceiling from 5 to 10 lakhs

Industries will prosper when people have money in hand, not when the population is taxed to death,

Any major tax cuts will dent government exchequer, so it has to be well balanced.
Reduction over a period of time, if at all ill be the only solution.

Bringing petroleum products under the ambit of GST will surely help a lot.

Originally Posted by Turbanator

Going forward, I don’t think anyone should even dream about lowered taxes, whether it is RTO or GST. We don’t have the people in legislation who think for the middle class.

Instead of uniformity, don’t get surprised if the state Governments add some COVID surcharge in coming weeks.

Automotive industry adds a major chunk to GDP, and the ancillaries connected with this industry is very large. Not only there will be a lack of demand, but the Industry will face higher taxes. Adverse Foreign exchange will add to the woes.

I am not sure if local businesses can compete. It will take a lot of efforts from the Government side to put barriers- high customs/ negative list etc.

A Covid cess looks inevitable.
But the interesting case will be in KL where already the flood cess is in action.

The lack of innovation and efficiency among SME's will no come to bite us back. They have already stressed financials.

[msdivy]

The reason for the slump or poor sales is cars are not an attractive means of transport in our country. Our infrastructure doesn't support the car as a primary means of transport. Govt's unnecessary taxes have made it an unattractive choice. That is the reason India manages just 10% sales of the top car sales country, though being 2nd populous country & 7th largest country. Japan & Germany are ~10% of India in terms of size & population but have 1.5 times the sale of India.

Originally Posted by johannskaria

Government can
1. Fast track the implementation scrappage policy by considering the vintage and classic car culture in our country.
2. Bring forward the unified one road one tax
3. Fast track the implementation of IRDA sandbox ideas
4. Increased R&D tax benefits to push for innovation in our country
5. Incentivise and promote new methods of acquiring vehicles like leasing
6. Reconsider the classification of automakers in the sin goods category

All the above these ease the supply-side restrictions. Here are a few recommendations from the demand-side, to make the car the ideal transport for all.
1) Ensure all business, shops have enough car parking space for its employees & customers.
2) Make all roads wide. Designate curb site parking on all wide roads. If the road cannot be made wider, the road area can be expanded by building a flyover on top of the road.
3) Reserve space in front of the residential areas for house owner's cars.
4) Re-design residential areas so that there is enough space for residents' cars & road traffic.
5) Build road infrastructure so that 1 Km takes max 2 minutes during peak hours for office commute.
6) Remove tax on fuel (which will half the fuel price).
7) Make 0% GST & abolish road tax for sub 5 lakh cars with the yearly service schedule.
8) Remove the distinction between private & commercial ownership & driving license.

The general trend is ICE cars are on the decline and electric cars are on the rise. There might be a disruption with self-driving cars in the next decade. As long as owner-owned cars are an attractive proposition, car sales will be high.

[Aditya]

This is not going to be easy. The first three steps that come to my mind are:

Improve infrastructure -
The roads are blocked with cars. We need better roads and a better traffic management system. Try the Worli Sea Face and Haji Ali traffic going towards town even at 7 pm. It can drive you up the wall on certain days. It is a criminal waste of fuel and time. Additionally, it's also impossible to find a parking in most parts of the city. The municipality has to speed up construction of multi-storey car parks. Till these problems are not solved, I'd rather use public transport or my bicycle.

Reduce road tax & insurance costs -
These are quite high and make owning a car more expensive. For someone not claiming depreciation for business, it's just a waste. No claim bonuses are minuscule. I am making it clear here, I have never had the need to claim insurance (touch wood).

One country, one tax -
The faster this is implemented, the better it will be. This will help people with transferable jobs immensely. At present they have the headache of disposing off vehicles they buy in a particular state when they are transferred or going through a long and tedious process of transferring their cars to the new state, paying the tax of that state and waiting for a refund of tax from the old state.

[humyum]

Originally Posted by turbo

I have a different perspective. I think the slowdown in sales was due to the rapidly approaching BS6 norms, and the lack of any new exciting launches, with all the manufacturers waiting for the BS6 fuel availability to launch their products.

There was only one BS6 product, and that was Seltos, and look how well it sold. Nobody else took the opportunity of an early move to BS6 with a facelift. Now the Bs6 Creta's here, the Bs6 Verna's here, just wait and watch the Seltos market share erode.

The automotive industry was facing a slump since many years

https://www.bbc.com/news/world-asia-india-49645889

https://www.newindianexpress.com/bus...p-2032188.html

https://www.indiatoday.in/news-analy...824-2019-08-14

Please read the autosector part in the above article, let me quote

"Automobile sector is facing its worst crisis in 20 years. Reports say around 2.30 lakh jobs have been lost in the auto sector. A large of it is being blamed on the global trend accentuated by the Brexit situation.

But what signals a deeper problem is the Society of Indian Automobile Manufacturers (SIAM) report that 300 dealerships have shut down in recent times. Sales of cars, tractors, two-wheelers have declined considerably. SIAM said about 10 lakh jobs have been hit in the auto component manufacturing industry"

And these are the times when people knew of only one Corona. When unemployment rate is at its 45 year high, when disasters like demonetization destroy the unorganized sector along with small and medium scale industries it is bound to effect everything. Education is very important for people in power.

My dad's business has been shut down ever since demonetization + GST combo happened and his business is 2nd largest sector in India which is textiles. The whole textile industry in India is destroyed

Originally Posted by turbo

Also I'm a little unsure as to how removing the 4m rule would help. Could you please elaborate a little?

Because of Sub-4 meter manufacturers are spending on cutting down their global products to sell their cars at lower taxes. Why not remove this rule, allow car markers to be charged the same taxes that they were being charged for sub-4 meters even for a bigger car with a bigger engine with whatever the ground clearance is. A lot of manufacturers will bring their international portfolio here as it would not need much investment and the customers aka us will benefit with better cars

Originally Posted by turbo

And its kind of odd that you find a problem with this government, which has always been considered as pro-business. I mean if you are this annoyed with this government, wonder what you will do when (if) the Left parties come to power, and all the industries control shifts from the owners to the Labour Unions, like a Marxist utopia.

Between the right one and left wing there is democracy. Between right and left, look at Kerala, Look at Maharashtra, Look at UP and Look at MP now in between the Covid crisis.

Government is pro-business to people they think are their friends and will fund their machinery when needed. Why do you think so many profit making companies are suddenly dying? ONGC, HUL, Jetairways, BSNL, there are many more. I have no doubt in my head that we are ruled by directionless leaders, even in the current covid crisis, what is the exit plan? Why are media houses not asking this fundamental question? Fear? Brought over?

When I look at news and twitter these days, it just pains me to see what has India become, just hyenas out there. Crude prices are below 20 dollars now, we are still paying prices which are when crude was at 140 dollars level before 2014 and there is still not enough money for health funds?

https://www.forbes.com/sites/william.../#580c37d62a11

Originally Posted by turbo

And lastly, I agree with your final paragraph. I too have a 13 year old Getz petrol thats doing absolutely fine, and I'll trade it for a 2022 Mahindra Scorpio (assuming it is ladder on frame), and keep that one till 2037.

Good choice

Originally Posted by johannskaria

Any major tax cuts will dent government exchequer, so it has to be well balanced.
Reduction over a period of time, if at all ill be the only solution.

Bringing petroleum products under the ambit of GST will surely help a lot.

Which they will make up much more when the number of sales increase of products and more tax comes in their kitty through taxes. When spending increases, everyone up and down the chain profits.

[sam_babushka]

In my honest, and frankly somewhat unreasonably simplistic opinion, there are only two steps that have to be undertaken.

1 - Tax holidays to car buyers for all vehicle purchases made till the remainder of 2020 (or Q1 2021) Applicable for both private and commercial vehicles
2 - Waiver of interest applicable on car loans taken till 31st December 2020, for the duration of the tenure (private vehicles only)

Both these steps are required because we risk entering a period of economic depression if measures are not undertaken to increase public spending. We are facing the very realistic prospect of the entire populace of employed workforce in India having 30-40% lesser income (thanks to salary cuts) or a portion of them being unemployed itself. Induce spending and the industry will receive the necessary temporary fillip to at least have a chance of sustaining through 2021. We are all aware of what the American government did to increase disposable incomes and the resultant public spending during the economic depression in the 1930s. We need to do something as simplistic, and similar, now.

[haisaikat]

As a person who did not have a home loan at some time but had a car loan I always craved for getting tax benefit for car loans. Even commercial / company registered cars can claim depreciation but absolutely no benefit for private car owner.

The Government might consider giving this as a benefit to boost car sales along with a capped car maintenance charges to be added for tax rebate of individuals. Even here, the sub 10 lakh car segment makes up highest share for both private and commercial cabs combined so they can very well consider this for sub 10 lakh cars only.

Reducing GST on car and fuel will reduce government income, so I think they may not consider going that route.

Also there is a reason why Indians (in India) consider car as luxury and not in USA. In the states there is no abundance of public transport which makes keeping a car a necessity and people live in localities where even the nearest grocery store is miles away whereas in here every new housing complex built brings the promise of a small market getting established in front of it with a steady inflow of home maids from nearby villages.