Uphill Task For Commercial Vehicle Makers: Study

A study on the health of the Indian automobiles industry _ which takes into account the value of sales and not the numbers _ shows that the industry, especially the commercial vehicles segment, is tottering in the throes of an unprecedented slow-down.

According to the study _ conducted by the Association of Indian Automobiles Association (AIAM) _ there was a 11.93 per cent drop in overall industry sales to Rs 7676.0791 crore in the first quarter of 1998-99 from Rs 8715.4441 crore in the corresponding period of 1997-98.

There was a 47.16 per cent drop in sales of medium and heavy commercial vehicles to Rs 1008.525 crore in the first quarter of 1998-99 from Rs 1908.525 crore in the same period of 1997-98.

 

The sales drop percentage for medium and heavy commercial vehicles in April-June this year was so large even though there had already been a drop of 38.71 per cent in the period of comparison: April-June 1997.

The plight of the light commercial vehicles segment was hardly better, as it has recorded a 17.53 per cent drop in sales to Rs 613.60 crore during the first quarter of the current financial year from Rs 744.05 crore in the corresponding period of 1997-98.

However, the numbers present a different picture. There was a 6.3 per cent rise in the overall sales of the automobile industry to 970921 vehicles in April-June this year from 913079 vehicles in April-June 1997.

According to AIAM, the analysis in value terms was necessitated since the true picture of the automobile industry was getting blurred by numbers as two-wheeler sales were speeding ahead.

"The two-wheeler sales represent large numbers but small value. The value is more crucial since it represents the actual contribution to the country's gross domestic product," say AIAM officials.

The sales of all two-wheelers (scooters, motorcycles and mopeds) rose 11.4 per cent in terms of numbers while there was a rise of 13.6 per cent in terms of value.

However, the sales turnover of the two-wheeler industry (Rs 2348.6211 crore) represents only 30 per cent of the total sales turnover of the industry, while the number of two-wheelers sold constitute 80 per cent of the total vehicle sales.

The AIAM study has assumed the value of medium and heavy commercial vehicles at Rs 7.5 lakh each, of light commercial vehicles at Rs 5 lakh each, of cars at Rs 2.7 lakh each, of multi-utility vehicles at Rs 3.8 lakh each, of scooters at Rs 24,000 each, of motorcycles at Rs 33,000 each, of mopeds at Rs 15,000 each and of three-wheelers at Rs 50,000 each.

The association has submitted a list of suggestions to the government to revive the sagging fortunes of the industry. These include:

* Reduction in the excise duty on commercial vehicles to 10 per cent from 15 per cent;

* Reduction in excise duty on all auto components to 10 per cent from the current range of 13-30 per cent;

* Measures to bring down the cost of auto finance;

* Incentives for fleet renewal to keep the fleet young;

* Special package for state transport undertakings and other fleet operators both for freight and passenger transport;

* 100 per cent depreciation for vehicles in the year of purchase;

* Increase in expenditure on road infrastructure;

* Withdrawal of the 5 percentage point increase in excise duty on multi-utility vehicles.