Events That Dominated Indian Automobile Industry In 2017
At a time when the industry was trying to recover from the shackles of demonetisation and continuous uproar over pollution, 2017 brought not much good news for the sector either
Photo Credit : Reuters
2017 was a year of disruption for Indian automobile industry; the sector went through a lot of ups and downs. At a time when the industry was trying to recover from the shackles of demonetisation and continuous uproar over pollution, 2017 brought not much good news for the sector either.
Primarily, four events dominated the industry in 2017: BS-IV emission norms, Goods and Services Tax (GST), Focus on electric vehicles, and New entrants to the market.
1. BS-IV Emission Norms
Supreme Court banned the sale of all Bharat Stage III (BS-III) vehicles starting April 1, 2017, thereby tremendously impacting two-wheeler and commercial vehicle manufacturers. The decision came as a shock to the industry as the losses mount to over Rs 12,000 crore.
According to ARAI (Automotive Research Association of India), the emission level for BS-III two-wheelers is restricted to 1.00 g/km, while the same for BS-IV compliant is not more than 0.75 g/km.
2. Goods And Services Tax (GST)
A lot of commotion happened with regard to the allotment of taxes and cesses on luxury cars and electric/hybrid vehicles. While electric cars have been taxed under the bracket of 12 per cent, hybrid vehicles fall under a much higher 43 per cent. This did not go well with the manufacturers as higher GST will further hinder the adoption of such vehicles by consumers.
When it comes to luxury cars and SUVs, government’s move to increase cess rates on such vehicles disheartened the spirit of make in India. Manufacturers feared of getting lesser revenues, thereby thought of redrawing investment plans for the country.
3. Focus On Electric Vehicles
The Indian government has charted out a long-term plan to electrify all vehicles across the nation by 2030. Recently, Minister of Road Transport and Highways Nitin Gadkari even warned the automakers to either switch to clean vehicles, or get bulldozed. However, automobile industry body SIAM said that all new vehicle sales in India to be pure electric is possible only by 2047.
To keep up with the trend, auto companies shared their plans for India. While Maruti Suzuki India has partnered with Toyota to roll out its first electric car by 2020, Mahindra & Mahindra joined hands with Uber and Ola to deploy such vehicles in the country.
Tata Motors is also on its way to launch its first batch of electric Tigor for government in 2018. Meanwhile, two-wheeler maker Hero MotoCorp invested Rs 205 crore in electric start-up Ather energy to expedite R&D in the said sector.
4. New Entrants To The Market
The competition is further going to toughen as new players have announced their entry in the Indian automobile market. South Korea's second largest automobile manufacturer Kia Motors has started building its first manufacturing facility in the country in Anantapur District, Andhra Pradesh. The company is investing approximately $1.1 billion, and the facility is expected to begin production in the second half of 2019 and produce up to approximately 300,000 units each year.
The iconic Ambassador maker Hindustan Motors was purchased by French auto major Peugeot for Rs 80 crore, and the company has initially planned an investment of Rs 700 crore in India.
Even China's SAIC Motor will also be setting up a passenger car manufacturing plant in India with an investment of around Rs 2,000 crore.
Toyota owned luxury brand Lexus entered Indian market in March 2017. However, here the automaker stands independently from the broader Toyota presence in India.