Rajiv Bajaj slams the government on over-regulating the auto industry2 min read . Updated: 14 Jan 2020, 10:23 PM IST
- Several thousands of rupees of insurance cost were imposed on every typical two-wheeler customer, said the MD of Bajaj Auto
- He said an 'over-regulated' market has pushed up two-wheeler prices, which would increase by around 30% in 18 months
Mumbai: Bajaj Auto Ltd’s managing director Rajiv Bajaj on Tuesday said that over-regulation is the single most inimical factor behind the demand downturn in the two-wheeler industry today. He was referring to the series of norms that have been introduced by the government over the past 18 months that have led to the increase in vehicle costs.
“The over-regulation is killing the industry. This started in September 2018 when insurance costs went up. Several thousands of rupees of insurance cost were imposed on every typical two-wheeler customer," Bajaj said on the sidelines of the launch of electric Chetak scooter in Mumbai on Tuesday.
In August–September 2018, a Supreme Court order made a three-year third party insurance cover for cars and five-year third-party insurance cover for two-wheelers mandatory, thereby resulting into a steep hike in the vehicle’s on-road costs for the consumers. In April 2019, this was later met with compulsory safety norms wherein combi-braking system (CBS) was introduced in all two-wheelers up to 125 cc and anti-lock braking system (ABS) in all models above 125 cc.
“Compulsory introduction of ABS resulted in increasing the prices by ₹8,000– ₹10,000. Under BS-VI norms, you have already seen that the prices have gone up by 7,000–18,000. If another 8,000–10,000 extra is imposed on the consumers, this means that in one-and-half-year period, the common man’s two-wheeler will see price hike of 30%. To me this is the hard, tangible issue on the ground. Nobody’s wallet is 30% bigger in 18 months’ time," said Bajaj slamming the government.
“Does the government has the humility to reflect and roll back some of this? While for the electric vehicles, they have brought down the GST to 5%, the petrol / diesel vehicles continue to see 28%. Can they at least bring it down to 18%, at least for a while? Can they for some time absorb the hit (price rise) that will come under BSVI?," he asked, commenting further.
He also said that a vehicle manufacturer struggles to improve productivity and reduce costs to keep price increases as close as possible to zero to avoid any price increase for end consumers.
On the intent to control air pollution and mandating the BS VI emission norms, he said “getting rid of old vehicles through a suitable mechanism would have been much more effective solution than squeezing out the last little bit of emissions from the BS-IV vehicles".