Finance Minister Nirmala Sitharaman on Tuesday said that the changing mindset of millennials has adversely affected the automobile industry who now prefer app-based taxis over-committing to pay EMIs to own car. Additionally, Sitharaman believes some other factors also affected the auto sector include movement towards BS-VI norms and registration-related matters.
According to TOI, Sitharaman stated, “The automobile and components industry has been affected by BS-VI and the mindsets of millennial, who now prefer to have Ola and Uber rather than committing to buying an automobile.”
She stated that the automobile industry had its “good times” for around two years. She told the reporters, “It was definitely a good upward trajectory for the automobile sector.”
Steps being taken to control the auto-slowdown
Earlier this day, the Finance Minister had stated that the Modi led government had taken breakthrough steps for India in its second term to make it emerge as a $5 trillion economy in the coming five years amidst the domestic & global slowdown.
The Bharat Stage VI emission norm will function from 1st April 2020 nationwide. At present, vehicles conform to Bharat Stage IV (BS-IV) emission standards. On 23rd August, Sitharaman announced lifting the ban on the purchase of vehicles by government departments and allowed an additional 15% depreciation on vehicles acquired from now till March 2020.
The state also clarified that BS-IV vehicles purchased up to March 2020 would remain operational for the entire registration period. Scrappage policy was included in the consideration to boost demand. The current slowdown in the automobile sector would lead to further job losses that could have societal and social consequences. The previous week, the industry sought urgent stimulus from the government in the form of GST reduction to help deal with the slowdown.
According to reports, SIAM (Society of Automobile Industry) had asked the government for a reduction of GST on all vehicles from 28% to 18%. Society of Automobile Industry said that the automobile manufacturers had to lay off around 15,000 temporary workers, while dealers witnessed around 2.8 lakh job losses with nearly 300 dealerships closing in the past three-four months.
The automobile sector accounts for almost half of India’s manufacturing output and employs over 3.5 crore people directly and indirectly.