Nudges to energize the auto sector

Reported by: |Updated: September 13, 2019

The auto sector is bearing the brunt of the economic slowdown. Sales are falling month after month and job losses are rising month after month. Fresh ideas are needed to revive the sector. Here are 7 suggestions for discussion and debate.
1. The steep rise in penalties in the amended Motor Vehicles Act is creating panic and will further hurt vehicle sales. Tough penalties are required to improve discipline so as to lower accidents. One suggestion is to cap the cumulative fine at any one time. Suggested limits: `10,000 for 2-wheelers, `15,000 for 3-wheelers, `20,000 for cars and `25,000 for buses & trucks. A tough yet non-oppressive system would yield the ideal balance between safety and growth.
2. Another source of distress in auto sales is the oncoming BS VI standard, which will increase vehicle prices further, particularly diesel vehicles. One suggestion here is to delay the implementation of BS VI by 6-12 months. This will give the buyers some relief and translate into breathing space for the manufacturers and dealers. This will not have a severe impact on the environment.
3. One barrier to highway travel is the mushrooming of toll booths. One suggestion is to give a 33% discount on toll charges for cars that are carrying 4 or more passengers. The increased revenue should offset the discount. Compared with city driving, highway driving does not create pollution in cities.
4. With more people preferring to determine affordability by looking at monthly outgo rather than one-time outgo, leasing will become an increasingly preferred option. Automobile OEMs should go aggressive on promoting leasing to recover sales.
5. More and more people are changing cities as they change jobs and re-registering a car is a financial burden, which discourages car ownership. Lower registration charges for inter-state transfer of vehicles will lower resistance to car ownership.
6. Given that the amended MV Act has made fines very steep, it is now the right time to do away with the requirement for commercial driving license for drivers of share taxis like Ola and Uber. We do not have dual licensing for lawyers, accountants, architects, plumbers, electricians, etc, and the same should be extended to drivers. With many people losing jobs, being able to take up a part time job as a driver is a good defense against total income loss.
7. Last, but not the least, is the pathetic condition of our roads. Who wants to buy a brand-new car only to drive it through massive potholes? If such potholes are to remain a permanent feature, 4×4 technology should be made mandatory on all cars!
Based on the Nobel prize winning theory, I believe that a large number of such nudges is a good way to reverse the auto sector slowdown.



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