Revival plan- will it arrest slide in commercial vehicles sales?

Responding to the growing demand for government intervention by different sections of economy to arrest the falling growth, union Finance Minister Nirmala Sitharaman announced a slew of measures on Friday evening. The falling sales in the automobile sector has emerged as the signpost of the new spell of economic slowdown and steep fall in the demand for trucks is indicative of slackening pace of economic activities. “ The gravity of the situation is such that the growth for April-July 2019 period is down in all segments and the de-growth is to the tune of -22% in passenger vehicles, -14% in commercial vehicles, -7% in three-wheelers and -13% in two-wheelers,” senior official of a leading industry association had commented recently.

To rev up the automobile sector, Sitharaman’s revival package includes deferring hike in registration fee till June 2020, allowing additional 15 percent depreciation on inventory, and promises of a scrappage policy to be unveiled soon. Considering the fact that BS VI will come into the play from April1st next year, will this booster dose will result in some pre-buying sales momentum building up in the commercial vehicle segment? Something that usually happens when new environmental standards are adopted. “ It will be too early to say how government’s new measures will impact the sales of MHCVs and LCVs in the remaining months of the fiscal. So far, there has been no indication suggesting a strong pre-buying rally coming into the play in H2 of this fiscal,” a top executive of a leading OEM commented.

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