Auto industry slowdown worsens, August 2019 data shows alarming dip in sales
New Delhi, Sep 09: The August 2019 data of the Automobile Industry released on Monday shows that the sector's slowdown has worsened further as compared to last month's data. The auto sector did not show any signs of revival as the domestic sales of passenger vehicles stood at 196,524 units in August 2019 which is 31.6 percent less than August 2018.
This is said to be the worst dip in sales in the auto sector in almost two decades.
Domestic car sales for August 2019 fell by 41.1 percent over August 2018 and stood at 1,15,957 units. This is the worst-ever fall for both the categories since SIAM started recording the data in 1997-98. Commercial vehicle sales plunged 38.7 percent and stood at 51,897 units in August 2019 as compared to August 2018. Passenger vehicle sales down 31.6 percent compared to same month last year and stood at 1.96 lakh units against 2018. Vehicle exports up 2.4 percent at 4.2 lakh units against August 2018.
Medium and Heavy Commercial Vehicles sales dipped by 54.3 percent in August 2019 as compared to August 2018 sales and stood at 15,573 units. Light Commercial Vehicles sales last month slid down by 28.2 percent as compared to corresponding month in 2018 and stood at 36,324 units.
SIAM July 2019 data:
As per data released by the Society of Indian Automobile Manufacturers (SIAM), vehicle sales across categories, including passenger vehicles (PVs) and two-wheelers, saw a major dip in July 2019. Sales in terms of numbers stood at 18,25,148 units in July 2019 as against 22,45,223 units in July 2018. The previous biggest decline across overall domestic automobile sales was recorded in December 2000 when it fell 21.81%.
The automobile industry is the pillar of the Indian economy, contributing 7.5 per cent to the country's GDP. The overall manufacturing sector contributes around 17 per cent, and within the sector, the share of the automobile industry stands at 49 per cent.
Govt's steps to address slowdown:
In a bid to boost demand in the auto sector, Finance Minister Nirmala Sitharaman announced a series of measures us the last week of August 2019. There was, however, a scepticism among investors about the slew of measures announced by Sitharaman on August 23. Experts felt that the steps taken were not enough as the problem as hand is massive.
The FM's announcement came at a time when the entire automotive sector in India is grappling with a slowdown that has resulted in it touching a 19-year low in terms of sales. This is spread throughout the segments including passenger vehicles as well as commercial vehicles, with component manufacturers feeling the pinch as well. As per reports, since April 2019, there have been over 3.5 lakh layoffs across the industry with the situation only set to get worse.
Major announcements in August by the Finance Minister to arrest auto sector slowdown:
- Government would focus on setting up infrastructure for development of automotive ancillary segment.
- Export of batteries to be encouraged. BS IV vehicles purchased upto 2020 March will remain operational for entire period of registration.
- Revision of one-time registration fee has been deferred till June 2020. Additional 15% depreciation on all vehicles to increase it to 30% acquired during the period from now till March 31, 2020.
- Government shall lift the ban on buying new vehicles. New vehicles to be bought by all govt departments.
- The government would put off a proposal to increase registration fees of vehicles.