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Pawan Goenka cannot figure out why vehicle sales are still in the slow lane despite the generous excise duty cuts offered in February’s Interim Budget.
“I am puzzled why this has not given any positive push to the market. When the Finance Minister announced the cuts, it was quite a surprise though something that the industry badly needed,” the Executive Director & President (Automotive, Farm Equipment and Two-Wheeler Sectors) of Mahindra & Mahindra told Business Line . Goenka believes that the only possible reason for this tepid reaction from the market is that potential buyers are in watch mode during elections and would rather wait till it is over and a new Government is in place. “Unlike other elections, there is so much public interest this time around. People , I think, are in pause mode,” he reasons.
Hopefully, he adds, the next big thing that will happen in auto sales will be during the second half of this month and June. In this backdrop, Goenka cautions that the lower (excise) duties should stay beyond the stipulated date of June 30. “The danger is that the Government should not think that since reduction of duties has not done the trick in boosting sales, there is no point continuing with these lower levels. If this happens, it will be a disaster,” he says.
From the Mahindra CEO’s point of view, the continuation of the duty structure is imperative because it is an “unusual time” for the auto industry. “I hope it (lower duties) continues beyond June 30 and we can wait till the next Budget to see what will happen. Agreed this cannot be a permanent thing but right now the industry needs help,” Goenka says. According to him, it is also perhaps time to stop any further price hikes in diesel as the differential vis-à-vis is adequate at this point in time. The price gap Goenka constantly sought between the two fuels was 20-25 per cent which is “right for India and should bring you close to not losing money on diesel”. This gap, he believes, is sustainable for the industry’s constituents. The best piece of news for M&M is that in this scenario of tepid sales in the industry, the Scorpio is still going strong, taking on multinational brands successfullyregistering its highest ever sales of 5,600 units in March.
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