Engineering Post Report
The automobile sector continues to stand out as one of the best performing amongst the large-scale manufacturing sectors in terms of providing jobs, revenues and bringing in technological advancements in the country.
Presently, there may be transient deceleration in its growth, but as the Auto Policy 2016-21 is going to bear fruits, there would be paradigm shift in the industry when many new players would soon be joining the market with entirely new models. Besides, the existing players have already made huge investments and a lot more are in waiting, Despite extraneous factors particularly in terms of tariffs and import and used vehicles, which still hold about 18 per cent of the market share, huge expansion of industry volumes take place to enact much awaited take off stage as envisioned in the Auto Policy 2016-21.
Automobile prices have no doubt witnessed multiple upward revisions due to Rupee depreciation, economic slow down due to curtailed domestic demand and price -sensitive buyers have somehow refrained from making their purchases. Additionally, certain restrictions on non-filers with respect to purchase of cars have also dampened the automobile demand to some extent.
There has been sluggishness everywhere in the local auto industry during the last financial year: except buses where normal growth of 17 per cent had taken place during July-March FY 2019. Indeed, there is enormous potential in demand for buses, waiting to unleash when serious measures are taken regarding formulating and implementing Urban Transport Schemes in the cities by replacing the old and dilapidated buses, presently plying on the roads of most of metropolitan areas in the country.
However, a persistent decline was in evidence in terms of Trucks which registered 27 per cent loss in production. The non-filers policy may not have impacted here ; but the work at certain government projects had been halted so are the supplies of trucks and the respective payments , resulting in the disruption of the chain of events at the trucking industry.
According to the available information, during July-March FY 2019, the farm tractor sector also massively declined by 28.7 per cent as their production was recorded at 37457 units against 52661 units produced in the corresponding period of the last year. This decline was due to massive slow down in the agriculture sector growth, water shortages and other issues like increase in the prices of agricultural inputs and halting of development projects which added to the woes of the farmers thus badly impacted the bookings of Farm Tractors.
Passenger car sector was somewhat resistant to the general receding trend in the industry with meager growth of 2.4 per cent . The grow was, however, also impacted by repeated policy changes with regard to the non-filers like imposition of ban on purchases , heavy taxation on registration by the non-filers and the latest 10 per cent levy of federal excise duty. The imposition of 10 per cent Federal Excise Duty (FED) on exceeding 1700cc engine capacity cars had also badly impacted locally produced cars and jeeps. The LCV / pick-ups being price sensitive also lost their ground with 14 per cent decline in their production.
The two/three wheelers sector has also failed to show normal growth., it had dropped off production by 5.8 per cent during July-March FY 2019. These vehicles cater to lower income group people and as such are extremely price sensitive. Still this sector continues to offer most preferred and economical means of transportation and the best alternative in the absence of public transport in the cities and thus holds a dependable and continued potential for growth in the coming years.
PRODUCTION OF AUTOMOBILES
Category Installed Capacity No of Units July 2018-March 2019
Car 240000 170116
LCV 43900 19536
Jeep 5000 5745
Bus 5000 649
Truck 28500 5027
Tractor 100000 37457
2/3 Wheelers 2500000 1342185