Automobile sector keeps fingers crossed

Struggling with low sales and poor offtake all through 2012,  the Indian automobile sector is pinning hopes on the upcoming Budget, expecting some relief in the form of tax rebates and incentives.

Facing the toughest times,  the sector also saw Society of Indian Automobile Manufacturers (SIAM), revising its forecast for the fiscal, particularly passenger cars that recorded a negative growth of 12.45% in January 2013, a  decade low performance.

In its pre-budget wishlist, the industry lobby group (SIAM) has requested additional excise duty of `15,000 levied on MUVs and passenger cars be withdrawn. The industry body said that it would be difficult for the sector to achieve the forecasted 1% growth for the passenger car segment.

The industry is yet to recover from the increase in excise on large cars from 22% to 27% in the last Budget, it added.

The utility vehicle (SUV/MUVs) segment has been forecasted to grow at 56-64% in the current fiscal and has been driving sales for most manufacturers.

“Adding to their problems is speculation that the Union government would levy additional tax on diesel vehicles that would further reduce sales,” Sandeep Singh, Deputy Managing Director (Marketing) of Japanese carmaker, Toyota said, adding  the move would be detrimental to improving consumer sentiments.

The industry has, in unison, maintained that high interest rates had led to drop in sales.

“The overall economic situation is gloomy and the consumer sentiments are deeply negative despite the recent notional rate cuts by RBI, ”  SIAM Director General, Vishnu Mathur said.

“The focus should be on reforms to revive the investment cycle,” Ajay Shephiya, an auto analyst with Centrum Broking told Express. Shephiya said that the government may not impose additional taxes on diesel vehicles due to the month-on-month increase already in place.

“(I) Don’t expect any changes in the excise duties but introduction of  special schemes for CVs under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) will be a welcome step. CVs determine the growth of the entire economy and introduction of  sops will bring down cost of ownership,” Shephiya said.