Auto Sector Sales Plunge 31%, Steepest Fall In Nearly Two Decades

Andrew Cummings
August 17, 2019

In July, sales across categories declined 18.7 per cent year-on-year.

With plunging sales, almost 300 dealerships have been forced to close down leading to loss of around two lakh jobs, Mathur said.

The SIAM auto sales report comes amidst the continuous lull in the sector with Industry veterans constantly raising the issue of improving sentiments and need for revival of the sector. Medium & Heavy Commercial Vehicles (M&HCVs) declined by 21.63% and light commercial vehicles declined by 8.56% in April-July 2019 over the same period past year.

The sales decline had dented production, causing job losses.

What Happened: Passenger vehicle sales in India fell by 30.9 percent in July, compared to the same period in 2018, Reuters reported August 13. Earlier in December 2000, the automobile industry recorded the highest decline of 21.81 percent.

In PV segment, market leader Maruti Suzuki India posted 36.71 per cent decline in its July sales at 96,478 units. There is no scope for further improvement in the situation, as Tata Motors and Mahindra & Mahindra have recently chose to halt production for a few days.

The latest auto sales figures imply that India's GDP growth that has already slid to a near five-year low, is likely to show signs of further erosion for April-June when fresh data will be released later this month. Two-wheelers saw a decline in sales by 16.82% in July 2019 as compared to July 2018. Two-wheeler companies sold 15,11,692 units of vehicles this month.

In fact, all vehicle categories witnessed decline in sales during the month.

Sales of commercial vehicles were down 25.71 per cent to 56,866 units in July as compared with 76,545 units in the year-ago period, SIAM said. "The industry is doing everything possible to increase sales, but it needs government support to prevent the crisis from worsening", Mathur told reporters in New Delhi. "In the upcoming festival season if the whole market turns completely positive, then it will be nothing else less than magical".

For your information, Mathur said that in the last two to three months, about 15,000 jobs have been lost in automobile manufacturing companies.

However, no authentic data is now available on the extent of job losses, as most of these have occurred on the auto part suppliers' side. Component makers are fearing job cuts soon, which may impact at least 10 lakh jobs.

Industry observers cited high cost due to GST and lack of adequate liquidity as the main reasons for the sales slowdown. Almost 300 dealership outlets have shut, resulting in 2.3 lakh people losing jobs. Mathur said this time the recession is quite different and deeper than the previous recession.

The automobile industry has seen downturns before: in 2008-09 and 2013-14.

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