Budget 2019 wishlist: Here are the key challenges for automotive sector

The FY20 Union Budget should aim to address the key industry challenge of demand degrowth

In FY19, the automotive industry's sales volume grew 5%. However, all vehicle segments have witnessed degrowth in the first two months in FY20 — the passenger vehicle (-19%) and the 2-wheeler (-11.6%) segments have been the worst-hit. The primary reason is the weak customer sentiment, credit squeeze, and higher cost of finance and insurance. The uncertainties before elections also contributed to this.

Key challenges

• Higher upfront cost (insurance premiums) - Q3FY19 onwards, customers are required to pay a higher upfront price on insurance (third-party premiums). This has been one of the primary reasons for a dip in the passenger vehicle