Auto wrap: Govt doles out package for EVs, disincentivises private buying

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If you are looking to buy an electric vehicle you have less than a month to benefit from the hefty subsidy provided by the center. The government wants you to switch to electric vehicles but does not want to incentivise you for that. More on this later in the copy. Here is the complete list of top auto stories of the week.

A sharp boost in retail demand across January coupled with buoyancy from new model launches has helped some car makers report double-digit growth in February. For others, the growth remained sombre.

The month saw price hikes carried out by most car makers leading to sustained weakness in consumer sentiments.

In a much-needed fillip, the Cabinet Committee of Economic Affairs (CCEA) approved a Rs 10,000 crore package for the second phase of Faster Adoption & Manufacturing of Electric (and hybrid) vehicles (FAME) scheme on February 28.

FAME II will focus on the electrification of public transportation including "shared transportation", incentives for an operational expenditure model for e-buses by state transport corporations.

The incentives will be applicable only for three and four-wheelers plying as commercial vehicles and public transport, with the incentives applicable for private two-wheeler vehicles that use advanced battery packs made of lithium ion.

French car brand Citroen will replace Peugeot in India when the PSA Peugeot Citroen group debuts locally. Citroen is a relatively lesser known domestic brand than Peugeot.

During the presentation of FY18 financial result and the second phase of its strategic plan 'Push to Pass' for the period 2019-21, Carlos Tavares, Chairman of the Managing board, confirmed the Group's ambition to conquer new markets and announced that the Citroen brand has been chosen to enter the Indian market.

Nearly 20 days after more than 90 percent of the workforce at tyre major MRF's factory near Chennai stopped work, the management at has agreed to their demands.

The agitation, which began on February 8 over demands for wage revision and removal of CCTV cameras from certain areas, ended on February 25. MRF, which is the largest tyre maker in the country, had termed the strike illegal.

Automaker Fiat Chrysler Automobiles (FCA) India on February 25 said it is recalling 11,002 units of its SUV Jeep Compass for updating powertrain control module (PCM) software to rectify variations that may cause non-compliance with emission norms.

The recall, which will begin in the first week of March, will cover only the two-wheel drive version of the model equipped with the two-litre diesel engine manufactured between December 18, 2017, and November 30, 2018, the company said in a statement.

Mahindra & Mahindra (M&M) has ventured into the app-based taxi market to rival established players like Ola and Uber with the launch of Glyd, which will run electric cars, in Mumbai.

Though brand Glyd is owned by M&M, the fleet will be owned by third party companies and drivers. M&M, which will not own any of the cabs, flagged off a fleet of 10 e-Veritos (fully electric versions of Verito).

The second phase of FAME scheme that is set to kick in from April 1 will bring with itself a disappointment. Buyers of electric and hybrid cars willing to use them for private use won’t be getting any subsidy from the government.

This will surely slow down the push towards the complete transition to electric vehicles which government of India has envisaged to reduce dependence on oil imports and make the country self sustainable. The government wants to discourage electric vehicles sales to private buyers and push for shared mobility.

Less than ten percent of car sales presently are bought by those buyers who put them to commercial use such as taxis. And the share of buyers within them who choose electric vehicles is less than one percent.

The concept of shared mobility on which companies like Ola and Uber have flourished has struggled to grow in the past couple of years. This is primarily because of saturation issues in all the metros leading to a dip in earnings and profitability for drivers.

In many cases, drivers are unable to meet the repayment costs of loans taken to purchase the vehicle leading to instances of bank repossessing the vehicles. Maruti Suzuki, Hyundai, Tata Motors have reported consistent fall in demand for cars from commercial users.

Under the existing FAME scheme, electric cars such as Mahindra e20 and Tata Tigor get a subsidy of Rs 1.24 lakh. In addition, states have their own incentive schemes such as zero road tax and registration fees in Maharashtra.

Prices of electric four wheelers have already shot up by Rs 15,000-20,000 following the increase in customs duty on vehicle parts imported into the country. With the withdrawal in incentives manufacturers of electric vehicles will certainly be on the back foot as most of them have readied a pipeline of products for the next 2-3 years.

But for now, everybody has welcomed the government’s move of infusing Rs 10,000 crore into providing not just the direct subsidy but erecting allied infrastructure such as setting up of charging stations.