Frequent policy changes hit industry confidence: Auto firms

Seeking a stable and predictable policy regime, the Society of Indian Automobile Manufacturers (SIAM) also said frequent policy changes over the past few years have shaken the confidence of companies who wanted to invest in India.

"When somebody invests in the country he is looking for stable policy regime, he doesn't want flip flops in a months time," SIAM Director General Vishnu Mathur told reporters here.

Over the past few years, there have been so many flip flops and there have been so many ambiguities in policy which have changed everything for the companies, he added.

"This industry contributes almost 50 per cent of the manufacturing GDP so if any experimentation is done on this industry, if it doesn't get the kind of support that is required it could be very very negative for the overall economy," Mathur said.

Big cars and SUVs are now facing possible hike in cess under the new tax regime with the GST council recommending increasing the maximum ceiling to 25 per cent from 15 per cent over and above the top tax rate of 28 per cent.

Mathur said that when the new GST rates were announced the industry welcomed them.

"We thought that the government has now fulfilled its promise of last four years to rationalise the tax. Now suddenly if they say the previous pre-GST rates are the benchmark that means all the discussions we had with the government over the last four years stands nullified," he added.

He said the auto industry needed a stable and predictable policy regime.

"They (companies) see India as a risky market with continuous change in policies... what we need is a stable and predictable policy regime. We have enough challenges in our hands in terms of technology," Mathur said.

He added that the good work done over the past 25 years in terms of nurturing the industry through a stable conducive policy regime will come to a bought if such changes continued.

SIAM Deputy Director General Sugato Sen said various projects like auto mission plan (AMP) were not heading anywhere because of "total vacuum" in terms of which direction to take.

"Nobody knows, somebody is talking about bio fuel, somebody is talking about electric vehicles," he added.

Passenger vehicle sales rose over 15 per cent in July driven by restocking of vehicles at dealerships after GST implementation.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales rose by 15.12 per cent to 2,98,997 units in July from 2,59,720 units in the same month last year.

Car sales were up 8.52 per cent at 1,92,773 units as against 1,77,639 units in July last year. Utility vehicles sales also rose by 35.72 per cent to 86,874 units.

"In June, dealers were liquidating their stocks while the reverse has happened in July. Dealers have replenished their stocks across segments last month," SIAM Director General Vishnu Mathur told reporters here. It will be clear by next month only as how retail sales have happened during the period, he added. During the April-July period, passenger vehicles grew by 7.9 per cent as compared to the same period of previous year. Commercial vehicles sales were, however, down 3.67 per cent during the period.

SIAM has given a outlook of 7-9 per cent growth in the PV segment for the current fiscal.

Last month, market leader Maruti Suzuki India continued its domination in the domestic PV space by selling 1,53,298 units, representing a growth of 21.89 per cent. Rival Hyundai Motor India sold 43,007 units with an increase of 4.38 per cent followed by home grown Mahindra & Mahindra at the third spot with 20,962 units, up 20.78 per cent.

Honda Cars sold 17,085 units during the month, up 21.75 per cent, while Tata Motors dispatched 16,793 units, a growth of 6.58 per cent.

Total two-wheeler sales in July grew 13.73 per cent to 16,79,055 units as against 14,76,332 units in the year-ago month. Motorcycle sales last month rose 16.9 per cent to 10,48,657 units last month compared to 8,97,084 units a year earlier.

Market leader Hero MotoCorp sold 5,43,938 units in July compared to 4,48,119 in the same month previous fiscal, up 21.38 per cent. Honda Motorcycle and Scooter India (HMSI) sold 1,68,075 units last month as against 1,20,381 units in the year-ago period, up 39.61 per cent. Bajaj Auto posted sales of 1,64,915 units as against 1,74,324 units in July 2016, down 5.39 per cent.

Scooter sales in July were at 5,69,809 units compared to 5,04,258 units in the previous fiscal, up 13 per cent.

Segment leader HMSI posted sales of 3,43,885 units during the month as against 3,09,170 in July 2016, up 11.22 per cent. Chennai-based TVS Motor Co posted a growth of 38.54 per cent in its domestic scooter sales at 89,646 units compared to 64,704 units sold in July 2016. Hero MotoCorp sold 67,369 scooters during the month compared to 72,440 units in the same period last year, down 7 per cent.

Sales of commercial vehicles increased 13.78 per cent to 59,000 units in July, SIAM said.

Vehicle sales across categories registered a growth of 13.3 per cent to 20,78,313 units from 18,34,302 units in July 2016, it added.