Economy

Passenger Vehicle Sale Dips For 9th Straight Month, Slumps 31% In July

Passenger Vehicle Sale Dips For 9th Straight Month, Slumps 31% In July”

The slump has rendered nearly 15,000 workers jobless over the past two-three months. "And let's not forget that the first quarter of last year had also seen a decline over the year before", said Rajesh Goel, senior vice-president and director (sales and marketing) at Honda Cars India Ltd.

The slowdown in the industry is largely on account of a bad festive season a year ago which led to the problem of higher inventories, tight liquidity with banks as a fallout of the NBFC crisis and an overall sluggish economy and low consumer sentiment.

The decline in sales is the worst since December 2000, when the industry sold a fifth of the vehicles it sells now.

Explained: Car sales down, what does this mean for the economy?

According to data, passenger cars sales plunged by 35.95 per cent to 122,956 units against 191,979 units sold in July 2018. The two-wheeler segment also witnessed a fall of 16.8 percent to about 1.51 million units.

For the ninth month in a row, the bloodbath in the automobile market continues, with sales of all vehicle segments staying in the red in July.

Sales of medium and heavy commercial vehicles fell 37% in July to 17,722 units, while light commercial vehicles posted a 19% decline to 39,144 units. "The industry needs an urgent revival package from the government". There is urgent need for some action. The industry is doing all it can to promote sales, including huge discounts.

The revival package is necessary to arrest fall in sales and to bring back the industry on growth path, he added. SIAM, which had last month warned of job losses if the slowdown continued, on Wednesday admitted that as many as 15,000 jobs comprising temporary and casual workers, have been cut by auto makers over the last two to three months.

The Automotive Component Manufacturers Association of India (ACMA) has sought immediate government intervention such as slashing GST to stimulate demand. According to SIAM's estimates, dealerships have reduced 2.5 lakh jobs, while OEMs have cut 15,000 employees. In 2008-09 and 2013-14, part of the automobile sector was a part of which was driving up sales.

"We are hoping that the government would soon come out with a revival package.... However, it is still not clear what all elements would be included in it".

Mathur said while Siam has proposed an overall GST reduction to be brought on vehicles of all segments, rollout of the scrappage policy will give a push to new vehicle sales.

"If this industry goes down, then everything gets hurt". The auto industry employs over 35 million people directly and indirectly. On the month-on-month basis, passenger vehicle retail sales were lower by 11.3 per cent to 224,755 units from an off-take of 253,529 units in May 2019.



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