Auto Crisis (worst downturn ever)
According to some market pandits Liquidity crunch post the NBFC crisis and IL&FS situation,uncertain regulatory framework,weak health of our economy,rural distress and poor consumption pattern are the major factors for declining auto sales.
Since auto sectors employs significant number of contractual workers,Sustained low sales volume in adjusted lower production at automobile companies and auto-ancillaries are resulting in job cuts in this sector.As reported by FADA around two lakhs people have been laid off across automobiles dealers in last three months.Auto-ancillaries are witnessing a production cut of 20-25% that are seriously affecting there balance sheets and share prices.
On 7th of august Representatives of automobile industries met FM and have sought a lower goods and services tax (GST) and a higher depreciation rate to tide over the crisis.According to Anand mahindra and other representatives GST rate of 28% plus cess in hurting sales and thus they have demanded a reduction in GST. Anand mahindra also mentioned about the registration fees as these have gone up very substantially and a rollback of the increase in road taxes mandated by state government after the introduction of GST.
Tata motors has had week long shutdown at four of its plants in the past 3 weeks. Honda has stopped production of some car models at its plant in rajasthan since july 16 and noida plant shut for 15days.
To revive the sector,GST rates should be cut and easier access to financing both for dealers and consumers are necessary.
Since auto sectors employs significant number of contractual workers,Sustained low sales volume in adjusted lower production at automobile companies and auto-ancillaries are resulting in job cuts in this sector.As reported by FADA around two lakhs people have been laid off across automobiles dealers in last three months.Auto-ancillaries are witnessing a production cut of 20-25% that are seriously affecting there balance sheets and share prices.
On 7th of august Representatives of automobile industries met FM and have sought a lower goods and services tax (GST) and a higher depreciation rate to tide over the crisis.According to Anand mahindra and other representatives GST rate of 28% plus cess in hurting sales and thus they have demanded a reduction in GST. Anand mahindra also mentioned about the registration fees as these have gone up very substantially and a rollback of the increase in road taxes mandated by state government after the introduction of GST.
Tata motors has had week long shutdown at four of its plants in the past 3 weeks. Honda has stopped production of some car models at its plant in rajasthan since july 16 and noida plant shut for 15days.
To revive the sector,GST rates should be cut and easier access to financing both for dealers and consumers are necessary.
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