Auto sales fall to 19-year low, stir questions on deeper malaise

More car buyers opting for high-end models with safety feature accessories

Sales of passenger vehicles, the barometer of the economy, to auto dealers fell 30.98 per cent to 200,790 units in July, the data from the Society of Indian Automobile Manufacturers, or Siam, on Tuesday showed.

Vehicle sales slumped by 35.95 per cent to 122,956 units from 191,979 units in the same month a year ago. The total sales of passenger vehicles and two-wheelers were 18,25,148 units, while in July past year, there were 22,45,223 units of sales in this category. 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 a year ago.

In July this year, vehicle sales registered the fastest decline in 19 years. He said the situation is so grave that total job loss in the auto sector is roughly 330,000.

Overall sales dipped 18.71 percent while overall CV sales declined by 25.71 percent.

"The data show how urgent the need is for a revival package from the government".

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The employees cited that till now job losses have mainly occurred on the part manufacturers' side, however, if the current market conditions prevail then downsizing might become a reality even in the OEMs. This too was the steepest since the decline of 35.22% in December 2000. In the last three months, 15,000 people have lost their jobs due to the slump in the automobile sector.

"When BS-VI comes in next year, it will increase the cost of vehicles, especially diesel", saud Society of Indian Automobile Manufacturers Director General Vishnu Mathur. For an industry, which is now in its 10th month of continually declining sales, July 2019 numbers are a back-breaker.

Sales declined to 16,46,776 units from 17,40,524 units reported for the corresponding month of previous fiscal. 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. 'But now is the time when the industry really needs the government's help.' he said, adding that the relief package is needed to bring the industry back on track and prevent a drop in sales.

Bhargava believes that the crisis has exacerbated because of a convergence of negative factors: new regulations on safety features making it mandatory for cars to have airbags and anti-lock braking systems (ABS); the introduction of collateral-based financing for automobile dealers, higher loan rates for new vehicle purchases; and a three-year insurance policy.

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. It has also affected the jobs of two lakh people. Component makers are fearing job cuts soon, which may impact at least 10 lakh jobs. In 2008-09 and 2013-14, part of the automobile sector was a part of which was driving up sales.

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