According to news reports, the government has proposed an increase in vehicle registration fees.
Another report said the Road Transport and Highways Ministry has proposed in a draft policy that buyers would not have to pay registration fees for new vehicles if they present a scrapping certificate.
The government, on July 26, proposed amendments to Motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles. In a draft notification, the government proposed renewal of fitness certificates for vehicles older than 15 years every six months instead of the current timeframe of one year, a PTI report said.
Following the news reports, shares of Bajaj Auto, TVS Motor Company, Ashok Leyland, Apollo Tyres, Hero MotoCorp, Tata Motors, Motherson Sumi Systems and Maruti Suzuki India slipped 3 per cent to 5 per cent on the BSE.
At 10:00 am, the S&P BSE Auto Index, the top loser among sectoral indices, was down 2.4 per cent or 395 points at 15,790, as compared to 0.27 per cent decline in the S&P BSE Sensex. The auto index was trading at its lowest level since February 29, 2016, when it touched 15,633 in intra-day deal.
The sector has come off by 35% over the last 12 months against 1.3 per cent gain in Sensex with a steep correction across the board due to concerns of elongated volume slowdown, talks of dealer financing challenges and regulatory led cost/ margin pressures.
“Admittedly, the cyclical slowdown has been steep and longer (against initial expectations). Additionally, earnings cuts are getting accentuated due to regulatory changes and rising competitive intensity. We note that macro environment around interest rates and fuel price is not currently a cause of concern,” analysts at JP Morgan said in an auto sector note.