RECESSION IN AUTOMOBILE INDUSTRY 2019
The Transport system is the main part of the development of the nation. Transportation plays an important role in developing any society. A good transport system makes it very easy to convey product to one place to another place. The automobile has given many people incredible freedom of society. It helps wherever want to go. The automobiles influence where people live and work and how they spend their time. The automobile itself becomes safer during the past decades with their design, interior and exterior.
Society of Indian Automobile Manufacturers – SIAM released a data on Indian automobile industry and explain that sales of all types of vehicle across the country declined by 18.71 percent in the July, 2019. The total number of vehicles sold in July 2019 declined from 22.45 lakh units to 18.25 lakh units as compared to June 2019. This decline in vehicle sales is the highest in the last 19 years.
The market leader Maruti Suzuki reported a 36.2 percent drop in sales during the month of July 2019. So here dropping the sales essentially means that the resulting decline in the aggregate demand for automobiles. So this is the indicator that the consumption pattern of Indian Economy is changing. The Indian economy is based on consumption model, so the aggregate demand slowdown means the consumption pattern comes down.
REASON FOR DECREASE THE AUTOMOBILE SALES
The Indian manufacturer cuts in the production it means that due to issue in demand the effects that supply is also coming down. The raw material industrial would be seriously affected. Secondly, another factor is the labour resource, in order to produce less, the labour requirement will also come down that means many labour workers will lose the job.
PEOPLES ARE NOT BUYING THE VEHICLE
This is forecast by some consumer, are waiting to purchase vehicles with the new Bharat Stage (BS – VI) emission standard, which has been decided to be implemented from April 1, 2020. Now a day environment is becoming a big issue in developing countries. Another side, Indian automobile manufactures cuts in their production and issue in demand. The issue has increased substantially increased in fuel price, higher interest rates of banks and increased auto insurance costs. A future expectation by the consumers that government maximum focus on electric vehicles. The less consumption of diesel and petrol for decreases the Global Warming related issues. In this current scenario festival season also failed to increase the demand, which led to a huge stock of vehicles with automobile companies.
Beside this, Non – Banking, Financial Companies (NBFC) were also suffering from crises. The two wheeler company, companies down their 11 percent in rural areas. Apart from this, GST is also being directly considered to play a major role for the slowdown in the automobile sector. Currently the GST rate for the all vehicle is 28 percent due to which the total cost of the vehicle also increases.
REFORM DEMANDS BY AUTOMOBILE SECTOR
The automobile industry demands that the current GST rate of 28 percent be reduced to 18 percent so that the price of vehicles can come down. Secondly, demands that government should take some measurement and clear policy for electric vehicles and provide in an easy loan facility to the automobile consumers.