Due to increased safety features and the rush to comply with emission norms, the cost of buying has gone up
Auto sales logged their ninth month of straight decline in July with car sales dropping 35.95%, a 19-year low.
Overall vehicle sales declined 18.71% as only 18,25,148 vehicles were sold in comparison to 22,45,223 vehicles in July 2018, according to the Society of Indian Automobile Manufacturers (SIAM) data.
The worst-hit among all segments was the medium & heavy commercial vehicles (M&HCV) segment, which witnessed a drop of 37.48%. Passenger vehicles (PV) saw a drop of 30.98%.
TOUGH ROAD
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- Due to increased safety features and the rush to comply with emission norms, the cost of buying has gone up
- SIAM is betting big on the upcoming festival season
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Vishnu Mathur, director-general of SIAM, said, "The drop in all segments is due to continued weakness in the consumer sentiment. Due to increased safety features and the rush to comply with emission norms, the cost of buying and maintaining a car has drastically gone up. As far as the commercial vehicle space is concerned, CV sales are down due to the axle norms, which has given more capacity to transporters."
On the other hand, three-wheeler sales declined 7.66%, while two-wheeler sales fell 16.82%. Within the two-wheeler segment, motorcycle sales saw a huge fall of 18.88%, followed by a 12.10% decline in scooter sales.
Last week the finance ministry met the auto sector representatives to assess the situation in the industry. At the meeting, the industry recommended the government to temporarily reduce GST to 18%, closely monitor NBFCs that are a major monetary support source for the industry and bring in a scrappage policy.
SIAM is betting big on the upcoming festival season and is hoping for a spurt in buying due to Bharat Stage VI norms. On the other hand, market leader Maruti Suzuki India Ltd witnessed a 36.83% fall in sales. In an interaction with DNA, Maruti Suzuki India chairman R C Bhargava said, "It is very difficult to predict the market right now. In the upcoming festival season if the whole market turns completely positive, then it will be nothing else less than magical."
Rural demand, which accounts for 39% of Maruti Suzuki sales, is currently low, just like the urban. However, Bhargava feels that sales can rebound on account of a good monsoon.
The auto industry is also worried about job losses. According to SIAM, the jobs are being lost due to cuts in production, which was 11% lower throughout the industry. According to SIAM's estimates, dealerships have reduced 2.5 lakh jobs, while OEMs have cut 15,000 employees. Component makers are fearing job cuts soon, which may impact at least 10 lakh jobs.
Zee Media Newsroom
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