Auto sales in India have registered a prolonged decline in sales since June 2019 and the last thing automakers would expect is prices to go up. At a time when the industry has been demanding GST rate cuts in a bid to keep increasing prices in check, the government has proposed a substantial increase in the registration charges which may further dismay auto sales. If the new proposal comes into play, new car buyers will have to shell out Rs. 5000 instead of Rs. 600 (current charge) for registering their vehicle while renewing of 15 year old vehicle will cost Rs. 10,000.
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Electric vehicle buyers have been exempted from registration charges along with other benefits.Two-wheeler buyers who have been paying Rs. 50 so far for registration will have to shell out Rs. 1000 for new motorcycles and Rs. 2000 for renewing the registration of their old two-wheelers. Fleet operators too will have pay Rs. 10,000 for new vehicles and Rs. 20,000 for renewing the registration of old vehicles. Earlier, commercial vehicle registration charges were just Rs. 1000. Moreover, registration charge for imported cars has gone up to Rs. 20,000 from Rs. 2500. Government has also proposed frequent fitness test for petrol and diesel vehicles which are over 15 years old and renewing their registration will only be allowed after they comply with the fitness norms.
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We already know that the government has shifted its focus on electric vehicles and the step has been taken to discourage the sales of petrol and diesel vehicles. Earlier, it had proposed to exempt EVs from registration charges along with several benefits to electric car buyers and tax rebates to EV makers. The step has also been taken to promote the scrappage of old vehicles. Car owners who give away their old vehicles at scrappage centres will be issued a benefit certificate which will exempt them from paying the registration charge.
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However, the Indian auto industry is going through a major transformation on the incoming of the emission, safety and fuel efficiency norms and has invested a significant amount to meet the regulations. Increased input costs coupled with other factors like one time insurance payment, liquidity crunch and low credit availability have already led to increase in prices which has subdued customer sentiments and in-turn has taken a toll on auto sales. The increase in prices is further expected to affect the industry and may hamper festive season sales and pre-buying which were expected before new norms kick-in.
