The entire automotive industry including all the players in the passenger car, commercial vehicle as well as two/three-wheeler manufacturers has united to seek a reduction in the GST rate from 28 percent to 18 percent on vehicles. This was reinforced by Rajan Wadhera, President, SIAM, who cited media reports which suggested that some auto industry leaders do not agree to the SIAM proposal for GST reduction on vehicles. The automotive industry is currently facing a daunting challenge of a deep slowdown that urgently needs some form of stimulus from the Government to supplement the efforts being made by the industry in reversing the industry fortunes towards positive performance.

Domestic passenger car sales fell 26.03 percent to 1,47,546 units in May, data from industry body Society of Indian Automobile Manufacturers (SIAM) showed. Industry observers pointed out that a high base effect along with low demand and high-interest costs continued to dent purchases. The data furnished by SIAM showed that passenger cars sales in the domestic market had stood at 1,99,479 units in May 2018. 

Among other sub-segments of passenger vehicles, the number of utility vehicles sold in the country decreased 5.64 percent to 77,453 units in May 2019. Sales of vans stood at 14,348 units last month, down 27.07 percent compared to the corresponding period in 2018. Overall passenger vehicle sales declined 20.55 percent in May to 2,39,347 units from 3,01,238 units.

In addition to the reduced demand today, new safety and emission norms that would come into play in the next few months would further drive up the cost of vehicles, leading to further pressure on demand. A reduction in the GST rates would go a long way in maintaining the price competitiveness of the industry and boosting consumer demand.