The Society of Indian Automobile Manufacturers (SIAM) said on Monday that sales report coming out from various companies for August has been dismal with over 30 per cent erosion of sales for passenger vehicles.
The commercial vehicle and two-wheeler sales are also significantly negative, indicating that the market has still not responded to various measures initiated by Finance Minister Nirmala Sitharaman last month, said SIAM President Rajan Wadhera.
The series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to non-banking finance companies (NBFCs) which support the bulk of finance for the automotive industry.
"The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers," said Wadhera in a statement.
All this while, the industry has pulled out all stops in offering attractive deals and discounts to the consumers.
"However, the ability of industry to provide large discounts is limited and this only highlights the need for government to consider reducing the Goods and Services Tax (GST) rates from 28 per cent to 18 per cent which will significantly reduce the cost of vehicles and in turn create demand," said Wadhera.
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There is also an urgent need to come out with an integrated incentive-based scrappage policy covering all segments of the auto industry as promised by the Finance Minister.
"As the festival season is around the corner, it is imperative that these decisions are taken quickly and announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry," said Wadhera.
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