Is auto industry going through worst crisis? Data says yes
As the Indian auto industry undergoes a crisis amid a broader economic slowdown in India, automobile sales dropped sharply in August, the worst decline since 1997-98. As per data released by the Society of Indian Automobile Manufacturers (SIAM) on Monday, year-on-year (YoY) sales dropped for the tenth consecutive month. Additionally, percentage sale of two-wheelers also hit a three-year low, the worst ever.
In August, overall passenger vehicle sales dropped by 31.57% to 196,524 units against 287,198 units in August 2018, SIAM data cited by NDTV revealed. Passenger car sales also dropped by 41.09% to 115,957 units from 196,847 units in August 2018. Comparably, utility vehicles dropped by 2.2% to 71,478 units from 73,085 in August 2018, while van sales dropped by 47.36% to 9,089 units from 17,266 in August 2018.
Reportedly, two-wheeler sales also dropped by 22.24% in August 2019 as sales fell to 1,514,196 units sold last month as compared to August 2018. For scooters, motorcycles, and mopeds, sales witnessed a 22%, 22%, and 21% fall. For commercial vehicles, only 51,897 units were sold last month against the 84,668 units sold in August 2018, registering a 38.71% decline.
Among commercial vehicles, medium and heavy vehicles independently witnessed a massive 54.3% decline in sales with 15,573 units sold last month against 34,073 in August 2018. Light commercial vehicle sales also dropped by 28.21% to 36,324 units sold last month against 50,595 in August 2018.
To note, the auto industry has been going through a slump which was addressed at the recent SIAM and ACMA conventions. Reportedly, the sector seeks a reduction in GST from 28% to 18% to boost sales during the festive season. Industry leaders believe a GST rate cut, even for some time, would help regain consumer sentiments, which had weakened in the recent past.
To deal with the auto industry slowdown, India's largest carmaker Maruti Suzuki suspended production in Gurugram and Manesar plants in Haryana for two days and laid off 3,000 temporary workers. Mahindra & Mahindra (M&M) along with other companies also cut production and laid-off workers.
However, a two-day meeting of the GST fitment committee last week gave no assurance for a GST cut. Meanwhile, the government lifted a ban on new vehicle purchases by state-run departments and offered concessions. Transport Minister Nitin Gadkari also said that the government was considering cutting taxes on petrol/diesel and hybrid vehicles. The industry now awaits the next GST Council meet on September 20.