The Indian Auto Industry is in a really bad shape right now as cars have plummeted over 30% year on year and this has to lead to manufacturers to cut back on production.
A cut-back means that job-losses are inevitable. As per Industrial estimates, over 3.5 lakh jobs have been lost in the downturn and over 200 dealerships have had to close shutters.?
Why is the auto industry heading towards a slow down?
There are several factors which have led to this state of affairs. These are-
- It has become much harder for individuals to secure new loans for buying vehicles. Banks have started to prefer only those individuals who have a high CIBIL score.
- The Government jump to BS6 standards has confused consumers and people are not sure whether to continue with existing vehicles or jump to a new one.?
- The strict environmental laws have meant that a great deal of uncertainty exists in diesel cars and this has impacted their sales.
- The onset of OLA and Uber has made travel easier for the people in cities which already suffer from lack of infrastructure and parking space.
- The rise of the electric vehicles have also possed several questions on the conventional auto industry and now the buyers are in a fix.?
What the government is doing?
Among many things, the government is looking forward to slashing the GST on automobiles. Current GST on auto vehicles is 28%. Any relief would boost demand for the auto industry.
The government is also looking forward to bring an attractive package for scrapping the old vehicles in favor of new vehicles.
The RBI has also slashed the Repo Rate which should make lending for the banks cheaper.