Automobile industry’s tumble continued for the tenth consecutive month with August witnessing the steepest fall in the past 21 years.
The data released by the Society of Indian Automobile Manufacturers (SIAM) on Monday (September 9) revealed a 23.55% fall in vehicle sales across categories, including passenger vehicles, two-wheelers and commercial vehicles.
Only 18,21,490 units auto sales were recorded last month as against 23,82,436 in August, 2018. Similarly, July recorded a fall of 18.71% in sales — 18,25,148 units in July, 2019 as against 22,45,223 in July, 2018.
In August this year, domestic passenger vehicle sales slumped by 31.57% to 1,96,524 units while domestic car sales dropped by 41.09% to 1,15,957 units. Besides, total two-wheeler sales also declined by a record 22.24% to 15,14,196 units as against 19,47,304 units in the year-ago month.
Commentating after release of the SIAM data, Biocon chairperson and managing director Kiran Mazumdar Shaw said that measures are required to save jobs in automotive sector which represents 50 per cent of the manufacturing sector jobs in the country.
“We need measures that are not about saving auto sector but about saving 50% of manufacturing jobs in the country which is what auto sector represents,” Shaw said in a tweet, in which she tagged finance minister Nirmala Sitharaman and transport minister Nitin Gadkari.
In another tweet, she said, “It would be good to see GST collections in each slab to evaluate impact of tinkering with 28% rate. Consumer sentiments need to be boosted by changing perception.”
The data further revealed that commercial vehicle sales were down 38.71 per cent in August while that of motorcycles fell by 22.33 per cent. Scooter sales too witnessed a slump of 22.19 per cent to 5,20,898 units as against 6,69,416 units in the year-ago month.
With prolonged slump in sales, automobile and component manufacturers have been seeking GST cut on automobiles to 18 per cent from 28 per cent to help the sector come out of a prolonged slump that has resulted in job losses. The next GST Council meeting will be held on September 20 in Goa.
The fall in passenger vehicle sales in August was also the 10th consecutive month of decline. In fact, all vehicle categories witnessed decline in sales during the month. SIAM said that passenger car sales in August were also the worst ever.
In the passenger vehicle segment, market leader Maruti Suzuki India posted 36.14 per cent decline in its August sales at 93,173 units. Hyundai Motor India Ltd (HMIL) also witnessed 16.58 per cent slump at 38,205 units, while Mahindra & Mahindra posted a fall of 31.58 per cent at 13,504 units in during the month.
In the two-wheeler category, Hero MotoCorp registered a 20.97 per cent drop in sales at 5,24,003 units, while rival Honda Motorcycle and Scooter India (HMSI) saw sales decline by 26.26 per cent to 425664 units. Similarly, Chennai-based TVS Motor Co saw its sales slump by 20.37 per cent at 2,19,528 units in August.
It is no secret that India’s famed automobile revolution is fading, with sales consistently in the slow lane. But the contours of the slowdown have undergone a transformation now, with sales of entry-level cars, most affordable two-wheeler brands and truck sales falling alarmingly.
A decline in entry-level cars signals the slowdown has percolated down to the first time buyers, ditto for entry-level bikes while a decline in truck sales is a sure sign of slowing overall economic activity.
India’s largest selling and most affordable small car, Maruti Alto, has seen a drastic decline in demand in August. When the slowdown reaches the humble Alto, it is clear that automobile sales have hit rock bottom.
Meanwhile, analysts at brokerage Equirus noted that India’s domestic automobile sales have always been volatile. “Indian auto sales have always been volatile. The standard deviation (SD) of four wheeler and two wheeler growth numbers are a whopping 19% and 13% respectively.”
These analysts also noted that despite increasing penetration of both category of vehicles, the Indian market was far from oversaturated. In other words, the current slowdown in vehicle sales wasn’t alarming according to these analysts and things should improve in the near term.
Further, analysts at brokerage Motilal Oswal said in their interactions with vehicle channel partners indicate no signs of demand recovery at retail levels, as inquiries remain tepid.
(With inputs from agencies)