India auto sales expectations hampered by extra taxes and diesel ban image

India’s automaker association lowered down its sales expectations, after the government imposed a new tax on passenger vehicles and a court extended a diesel ban in the country’s capital.

This is the second consecutive month when the Indian automaker association lowers its sales forecast. Demand for passenger vehicles and commercial ones may grow up to 8 percent for the year started in April, Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers, said last week in New Delhi. This new moderate projection follows another cut of the growth factor last month, when the body adjusted downwards with 1 percent its sales expectations, to 11 percent. The cut is because of a new government policy which plans to put a 1 percent tax on cars that cost more than one million rupees (around 15,000 dollars), as well as an infrastructure-related levy based on engine capacity.

Furthermore, the nation’s Supreme Court ordered back in December a temporarily ban on the registration of big diesel vehicles in New Delhi and the surrounding area, thus suspending registration of cars powered by 2.0 litres engines or more. At the end of March, the Court decided to extend this embargo, disrupting the automotive industry in the city, as it is the largest market for passenger cars in the country.

For the year April 2015 to March 2016, the group said the sales of passenger vehicles rose by 7.24 percent, the fastest pace in five years. The Indian auto industry produced a total 23,960,940 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in the April to March 2016 period, up 2.58 percent over the same time a year earlier.

Via Bloomberg