Interim Budget announced on 17th feb has some good news for the Auto Industry customers ! The government has decided to reduce the excise duty in the auto sector to boost the declining sales but this means that the manufacturers will have to take the dent of financial burden on them for the unsold stock lying at their respective dealers
Our car industry carries inventory of about 45 days production at dealership , transit and at Godowns . We have around 17 passenger vehicle manufacturers giving an output of around 2.5 million units every month , this adds up to approximately 14 - 15 million if we take in account two wheelers , 3w and CVs aswell . As per data collected source indicates that this will add up to a financial burden of Rs600 crores for listed companies and for the entire industry it will be obviously much higher .
The dealerships are not in a position to take such dents ever so these are always absorbed by the manufacturer as the dealer has no option but to charge the reduced pricing from the buyer
The excise duty has been reduced by 3-6 percent across various sets of vehicle , the prices will be reduced starting from 3000 in entry level segment to a few lakhs in the top premium segment . A similar excise cut happened in 2008 aswell to boost the demand in the auto sector.
This step definitely will boost the demand and increase the numbers of auto industry but will those numbers be sufficient to set off the excise cut financial burden being absorbed by the auto companies ! How long will the industry take to set off the burden ! Should the government have a provision to adjust the excise duty being charged on the unsold stock lying with the manufacturer or dealer unless billed to the consumer !
No comments:
Post a Comment