Consumer sentiments are low in India while economic slowdown remains persistent and they have led major automobile manufacturers -- Tata, Mahindra and Maruti -- to report significant decline in sales during August.
The Society of Indian Automobile Manufacturers (SIAM) has now come forward to state that sales report coming out from various companies "for August has been dismal" with over "30 per cent erosion of sales for passenger vehicles".
A worker adjusts the windscreen wipers of a parked car at a Maruti Suzuki stockyard on the outskirts of Ahmedabad. Reuters Photo
According to news agency ANI, Tata Motors reported a 49 per cent slump in its domestic sales on a year-on-year basis at 29,140 units. The commercial vehicles' sales dipped 45 per cent to 21,824 units, it said. It sold 7,316 passenger vehicles in August, showing a decline of 58 per cent from 17,351 units during the year-ago month.
"Subdued demand sentiment due to poor freight availability, lower freight rates and a general slowdown in the economy continued to hamper commercial vehicle demand," said its President of commercial vehicles business division Girish Wagh.
Maruti Suzuki India too reported 32.7 per cent decline in its vehicle sales last month. The company sold 106,413 units including exports compared with 158,189 vehicles in August 2018.
Mahindra & Mahindra also reported a 17 per cent fall in its farm equipment sector. It sold 13,871 tractors in the domestic market during August 2019 compared to 16,375 units in the same month of last year, marking a 15 per cent decline. The exports of tractors declined by 33 per cent to 946 units from 1,410 in August 2018.
The commercial vehicle and two-wheeler sales are also significantly negative, indicating that the market has still not responded to various measures initiated by Finance Minister Nirmala Sitharaman last month, SIAM President Rajan Wadhera was quoted as saying by ANI.?
"The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers," said Wadhera.?
All this while, the industry has pulled out all stops in offering attractive deals and discounts to the consumers.
"However, the ability of industry to provide large discounts is limited and this only highlights the need for government to consider reducing the Goods and Services Tax (GST) rates from 28 per cent to 18 per cent which will significantly reduce the cost of vehicles and in turn create demand," said Wadhera.
For a country already reeling under an economic down-slide and lack of new employment opportunities, slumping sales from the auto sector is a grave reason to worry as they are triggering massive job cuts.?
Former Prime Minister Manmohan Singh had on Sunday warned: ¡°The Modi government¡¯s policies are resulting in massive job-less growth. More than 3.5 lakh jobs have been lost in the automobile sector alone. There will similarly be large scale job losses in the informal sector, hurting our most vulnerable workers".?
The layoffs continue as carmakers including Honda Motor, Tata Motors and Mahindra & Mahindra have implemented brief suspensions to production in recent weeks in the face of slow demand. The auto sector, which contributes more than 7 per cent to the country's GDP, is facing arguably its worst downturn and the livelihoods of lakhs of people hang in the balance.
The cull in the auto industry has been so extensive that the initial estimates suggested automakers, parts manufacturers and dealers have laid off about 3,50,000 workers since April this year.?
With Inputs From Agencies?