Formation of a stable Government at the Centre after the recent elections and excise duty cuts announced in the interim Budget helped the struggling auto industry post better sales in May.
Domestic vehicles sales rose 13.22 per cent last month to 16,98,138 units against 14,99,893 units in May last year, the Society of Indian Automobile Manufacturers (SIAM), the apex auto industry body, said on Tuesday.
While the domestic passenger car segment saw a 3.08 per cent rise in sales at 1,48,577 units last month compared with 1,44,132 units a year ago, motorcycle sales rose 11.71 per cent to 9,84,469 units, from 8,81,288 units in the year-ago period.
“This May, we are seeing some positive sales after a long time. Stability of the Government, post elections, is a sentiment-improving factor. “Also, the excise duty reduction that was offered in February helped the industry reduce prices,” Vishnu Mathur, Director General of SIAM, told Business Line.
The excise duty reduction is valid till June 30. SIAM is seeking an extension of the cut in the coming Budget. “If the excise duty is not extended, that would be a negative factor,” he added.
Apart from this, the auto industry wants Goods and Services Tax (GST) to be brought in as soon as possible, Mathur said.
“We would also like to see a scheme from the Government where tax incentives are given for scrapping old vehicles and replacing them with new ones.
“We could take out a lot of old vehicles from our system which will help in cleaning up the air, increase safety and fuel security.”
Two-wheeler sales grew 16.3 per cent in May to 14,02,830 units, from 12,06,173 units in the corresponding month last year.
Total sales of commercial vehicles were down 15.28 per cent to 46,986 units last month from 55,458 units.
Commercial vehicle sales have been largely impacted by a slowdown in the infrastructure sector, ban on mining in many places and restrictions on Government purchases because of austerity measures, Mathur said. The three-wheeler segment saw sales grow 12.44 per cent to 40,369 units in May compared with 35,904 units a year earlier.