During the meeting with Finance Minister Nirmala Sitharaman, the auto industry broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand.
The first leg of the 35-day festive period, which ended with Dussehra, failed to bring any cheer for auto companies. While makers of passenger vehicles struggled to meet demand due to the persistent shortage of semiconductors, a recovery in demand remained elusive for two-wheeler manufacturers despite offers and schemes. The overall season, which ends two days after Diwali, is unlikely to bring any turnaround in either the supply or the demand scenario, said dealers and officials at auto companies.
For automakers, the festive season is about raking it in through ramped up sales and attractive consumer offers. However, despite the robust demand, what may spoil the party this year is a global shortage of semiconductors.
With entry-level cars being preferred amid the pandemic, market leader Maruti Suzuki has strengthened its hold, along with Hyundai Motor India.
If the court order is implemented, it will lead to an increase in the insurance outgo for car owners by a minimum Rs 50,000 for car and a minimum of Rs 7,000 for two-wheeler owners.
The muted expectation of dealers come at a time when vehicle manufacturers such as Maruti Suzuki, Hyundai Motor, Mahindra & Mahindra and others reported a double-digit fall in wholesale dispatches to dealerships in July and August.
Increasing the duties on auto parts and putting an additional cess on petrol and diesel could drive up costs of vehicles, specially where volumes are low and localisation is not viable.
The development comes after a recent notification from the Union home ministry, which has permitted companies to resume manufacturing operations and reopening of shops in red, green and orange zones with certain riders.
While two-wheeler sales are down 15 per cent year-on-year, passenger vehicles sales are lower by 5-7 per cent.
The slowdown in growth is an industry-wide trend and companies are adjusting production to bring down the inventory levels at plants as well as dealerships.
Among those who have the most to lose from India's haphazard policies are dealers selling cars made by Toyota, Mahindra & Mahindra, Daimler AG's and Tata Motors' luxury arm, Jaguar Land Rover
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