Indian automobile sales slumped by 36 percent year on year in July this year, declining for the ninth consecutive month and indicating the sharpest year-on-year decline in 19 years, according to latest data released by the Society of Indian Automobile Manufacturers’ (SIAM).
According to the SIAM data, commercial vehicle sales were down 26 percent year on year in July.
The SIAM said that as many as 15,000 jobs, mostly contract workers, had been terminated by all automobile manufacturing companies over the last three months.
Maruti Suzuki, the country’s largest automobile manufacturer with a market share of over 50 percent, recorded a 34 percent year-on-year drop in sales in July, declining for the sixth consecutive month.
“The motor industry slowdown will have repercussions across the Indian economy since the sector accounts for half of the country’s manufacturing sector gross domestic product (GDP) and employs 37 million,” Vishnu Mathur, SIAM director general said.
The industry has attributed the downturn to the government placing automobiles under the highest Goods and Services Tax (GST) rate of 28 percent - the same as that applicable for ‘sin’ products like cigarettes and tobacco products, the hike in registration charges and insurance premiums and the shortage of credit from financial institutions to retail buyers and automobile dealers to finance stocks.
India’s largest commercial vehicle manufacturer Tata Motors shut down production for 12 days last month, while the second largest manufacturer Ashok Leyland shut down its production line for nine days last month to check the build-up of inventory.
“20 percent of steel produced gets consumed by the auto industry and the slowdown has an impact on the steel industry and that is certainly what has played out over the last three months,” Tata Steel CEO T V Narendran said in a statement.