Union Budget 2022: Expectations for the automobile and rental car segments

Given that purchasing a new vehicle isn’t feasible for everyone and public transportation is ruled out owing to safety concerns, the natural choice has been shared mobility, especially on a subscription basis.

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As we close another financial year amid the pandemic, the global economy is finally on the road to recovery, albeit with some large-scale, seemingly permanent transformations. While some states have brought back night curfews and weekend restrictions due to the emerging cases of the new Omicron variant, lockdown measures have largely been eased out, as compared to earlier this year and last year. This has enabled people and businesses to function smoothly on a day-to-day operational basis, to a large extent.

With these changes and easing out of operations, one of the most important aspects of our life, transportation, is seeing a surge in demand as people once again step out of their homes for daily commute. Given that purchasing a new vehicle isn’t feasible for everyone and public transportation is ruled out owing to safety concerns, the natural choice in the past two years has been shared mobility, especially on a subscription basis.

Compared to the traditional auto segment, the vehicle rental industry is expected to grow at a CAGR of close to 10%. Furthermore, several start-ups are currently engaged or planning to enter this market due to the overall increased relevance of the sector. So the industry naturally has distinct expectations from the upcoming Union Budget 2022-23.

More Clarity on EV Progression

The Union Budget of 2022-2023 will be a crucial turning point for the auto sector as it can help in the effective revival of the industry. With the implementation of the right policies, the growth of this sector is inevitable. One of the important areas for both the government and the auto sector is the growth of Electric Mobility. With most Indian and international investors eager to invest in the Electric Vehicle (EV) segment, the government must bolster the infrastructure for easy manufacturing and usage of EVs and EV-related elements such as charging booths to boost demand.

This is because range anxiety due to the lack of robust charging infrastructure is one of the primary reasons consumers are apprehensive about adopting EVs. Many governments have already taken steps that encourage people to opt for electric vehicles and offer discounts on taxes.

People being more environmentally cautious is also a positive sign; rather than buying fuel-based vehicles, people are opting for sustainable electric cars, and the governments are highly backing it up. Hopefully, this financial year a green flag will be given towards developing the automotive, and car rental segment, with the governments giving tax incentives for electric vehicles seems like a positive step in making a more sustainable growth.

Tax Incentives

When it comes to technological advancement in the auto sector, we are witnessing one of the largest tech-led transitions in India and the world. In this year’s Union Budget, we can expect that the focus will be more on tech-led developments in the Auto sector. It is the perfect opportunity for the industry to capitalize on and boost growth. We also look forward to more tax incentives for the travel and trade industry. A separate consideration for the start-ups would be much appreciated by the industry.

Summing up

The automotive rental industry has to be brought into mainstream budgeting because this is one sector that is rapidly expanding, and the industry expects the government to support the industry at a time when the overall economy is recouping.

This article is authored by Greg Moran, CEO & Co-Founder, Zoomcar. All views are personal.