Auto Sales Hit Rock Bottom: July 2019 Sees 31 Per Cent Decline

The slowdown comes at a time when the industry is gearing up to meet the upcoming emission and safety norms.

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The Indian auto industry has been witnessing a downturn since a year.

Highlights

  • Auto sales have been down for the last three quarters.
  • Lakhs of jobs are at risk.
  • It's the most vigorous downturn the industry has faced in a long time.

Auto sales in India have been spiraling down since the last nine months and it is perhaps the worst  downturn the industry has witnessed in almost two decades, where each and every segment in the auto industry is seeing a slump. The Passenger vehicle (PV) segment has recorded a sales decline of 30.98 per cent selling 200,790 units as compared to 290,391 units which were sold in the same month last year. Sales of passenger cars were down by 35.95 per cent selling 122,955 units as compared to 191,979 units which were sold in July 2018. The UV segment recorded a sales decline of 15.22 per cent at 67,030 units as compared to 79,063 units which were sold in the same month last year.

As far as the van segment is concerned, it witnessed the highest decline of 45.58 per cent selling 10,804 units as compared to 19,889 units which were sold in the corresponding month last year. It was in December 2000, that the Indian auto industry had last seen a percentage decline bigger than July 2019. The passenger vehicles sales registered a de-growth of 35 per cent while the passenger car segment saw a percentage slump of 39.86 per cent.

Also Read: SIAM Demands Immediate Reduction In GST Rates From Government

The slowdown comes at a time when the industry is gearing up to meet the upcoming emission and safety norms. Carmakers and component makers have together invested about ₹ 80,000 crore for the BS6 transition and if the sales don't pick up, the industry may find it difficult to recover the invested capital. As an end result, carmakers may consider increasing prices in a bid to sustain margins which could make the situation even worse, given that the consumer sentiments are already down. Overall economy slowdown due to liquidity crunch and low credit availability in the past couples with increase in the prices have taken a tremendous toll on auto sales and SIAM has requested a temporary reduction in GST rates on passenger vehicles and have asked to charge them under the 18 per cent bracket instead of 28 per cent at which they are currently charged. The tax reduction is also required to sustain margins and avoid any further price hike which is likely to happen as Bharat Stage 6 technology will make vehicles more expensive. SIAM has raised concerns over the recently draft notification to increase registration charges on vehicles. The Ministry of Road Transport & Highways (MoRTH) recently proposed to hike registration charges by 10 to 20 times, depending on the vehicle category.

Also Read: Auto Industry Slowdown Hits Lakhs Of Jobs

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Job losses across the sector is the biggest threat of the downturn. India's largest carmaker- Maruti Suzuki has already laid off 6 per cent of its workforce while Nissan India recently let go 1,710 of its employees. Ram Venkataramani, President- Auotmotive Components Manufacturers Association (ACMA) had said last month that if the slowdown continues, an estimated 10 lakh people could be laid off from the entire industry. Pawan Goenka, Managing Director- Mahindra & Mahindra during the company's Q1 financial results told reporters that he sees an impending danger of job losses across the ailing auto sector. According to a recent NDTV report, the slowdown in auto sector has rendered an estimated three lakh and fifty thousand people jobless.

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