Auto stocks decline post NITI Aayog's directive on electric vehicle

So far in 2019, the Nifty auto index has slipped 14 per cent as against a 7 per cent rise in the Nifty50 index.

Shares of two and three wheeler auto-makers like TVS Motors and Bajaj Auto came under heavy selling pressure during the morning deals on Monday after the government think-tank NITI Aayog gave the industry a deadline of two weeks to come up with a plan to switch to electric vehicles (EVs). 
 

The government intends to ban internal-combustion powered two and three wheelers by 2023 and 2025, respectively which has resulted in an impasse between the two stakeholders.
 

At 10:25 am, the Nifty Auto index was trading at 7,782 levels, down 1.1 per cent. The index slipped as much as 1.35 per cent  during the trade. Among the pack, TVS Motors, Motherson Sumi and Bajaj Auto registered the steepest losses, shedding 4.5 per cent, 3.5 per cent, and 2.04 per cent, respectively. TVS Motors hit a 52-week low of Rs 428.45 on NSE during the trade. 

Hero MotoCorp, Eicher Motors and Maruti Suzuki, too, slipped up to 1 per cent each. In comparison, the benchmark Nifty50 was trading 0.15 per cent lower.

National Institution for Transforming India (NITI) Aayog officials met executives from companies including Bajaj Auto, Hero MotoCorp and TVS late on Friday, and asked them to come up with the plan within two weeks. READ REPORT HERE
 

Automakers, allegedly, opposed the proposal and warned that a “sudden transition, at a time when auto sales have slumped to a two-decade low, would cause market disruption and job losses”.
 

While government officials pressed for switching to EVs so that India does not miss out on the “global drive towards environmentally cleaner vehicles”, industry executives opined that a premature switch with no established supply chain, charging infrastructure or skilled labour in India, could result in India losing its leadership position in scooters and motorbikes.

“It was a shock-and-awe meeting on Friday! Shocked because I heard that despite the claim that EVs are superior, both in terms of environment and experience, and in spite of the fiscal sops, the e-revolution can’t get off the ground unless it stands on the crutches of banning two- and three-wheelers running on ICE,” Rajiv Bajaj, managing director, Bajaj Auto, told Business Standard.
 

India is one of the world’s largest two wheeler markets with sales of more than 20 million scooters and motorbikes last year.

According to a Business Standard report, the industry has asked for at least four months’ time to come up with a plan on how it wants to proceed on the matter.
 

In 2019 so far, the Nifty auto index has slipped 14 per cent as against a 7 per cent rise in the Nifty50 index.