Millennial mindset of using Ola, Uber is adversely affecting auto sector: FM

What’s causing auto industry slowdown? Millennials, among other things: FM Sitharaman

What’s causing auto industry slowdown? Millennials, among other things: FM Sitharaman

Facing its worst decline in sales since 1997-98, the automobile sector has been clamouring for measures to rejuvenate demand, including relaxation in GST rates.

Sitharaman was addressing media on "100 Days of Bold Initiatives and Decisive Actions" of the government at 2 pm at Chennai.

However, the finance minister was elusive on GST rate cuts for the auto sector. The industry saw a 12.25% decline in production in April-August 2019 compared to a year ago.

"Some studies do tell us that mindset of millennials, who are now preferring not to commit an EMI (equated monthly installment) for buying an automobile, instead prefer to take Ola, Uber, everything else, or take the metro".

Domestic sales of passenger vehicles fell 31.6% in August 2019, compared to the same period past year.

Sitharaman also talked about GDP data which was around five percent in the last quarter and said that the government was aware of the economic challenges and the government officials were in talks with representatives of different industries. Ms. Sitharaman said the factors included the transition to BS VI vehicles, registration fees and also the mindsets of millennials.

While the Finance Minister did not give any clarity on what the Centre is doing to address the slowdown, she said that the government is talking to the industry to see how best it can help them.

"The auto sector, which had good times till two years ago, is affected because of various other issues too", said the Finance Minister. In the passenger vehicle segment, market leader Maruti Suzuki India posted 36.14 per cent decline in its August sales at 93,173 units. Also she lifted the ban on purchase of vehicles by government departments and allowed additional 15 per cent depreciation on vehicles acquired till March 2020.

On the dip in GDP growth, she said, "I am not underestimating it or sitting here without responding to do something to boost it to grow better".

On the recently announced bank mergers, she said the effective dates of mergers are to be decided by the individual bank boards. The banks will benefit from each other's strength.A growing economy needs good banks. This is down from a GDP growth of 8.2% in the first quarter of the previous financial year.