With domestic automobile sales continuing on a downward spiral, the industry on Wednesday cautioned that if immediate concrete measures are not taken by the government to help arrest the fall, job cuts may soon follow in the sector that employs nearly 37 million people.
In June, total vehicle sales in the country declined by 12.34% to over 19.97 lakh units, as per data released by Society of Indian Automobile Manufacturers (SIAM).
PV sales drop
Passenger Vehicle (PV) sales fell 17.54% to over 2.25 lakh units. The PV sales had been declining for the past 12 months, barring a slight uptick in October 2018.
Additionally, passenger car production stood at over 1.69 lakh units last month — the worst since June 2013, when it had dropped to over 1.64 lakh units. “This is the worst phase of the industry. We have not seen such kind of prolonged slowdown ever. There have been patches of de-growth earlier but that lasted for one or two quarters at most. Nothing like this has happened before,” said Rajan Wadhera, president, SIAM. He added that the industry doesn’t see this improving “as it is linked to the overall GDP figures… the economic survey is talking of the last quarter of 5.8% growth.” Expressing disappointment that the industry’s concerns were not addressed in the Budget 2019, particularly the demand to reduce GST on automobiles, he added that if the de-growth continues, it is bad for everyone and industry will need to take “critical” “measures to stay afloat” and “conserve resources”
“…in the short-term, if we don’t arrest it [the decline], the de-growth will continue. It is already affecting us financially... if we have no work, then there will be no new jobs and the current jobs will also start going down,” he cautioned.
Asked if there have been any job cuts over the past year, he said, “I don’t think that phase has started, but we are very close to that. We can’t survive at this moment. At SIAM, we support the electric vehicle plan of the government, but at the same time, we must survive during that plan.”
“… Reduction in the GST, which unfortunately has not happened, would have been the biggest enabler to start the demand… We have been making the presentation to the government saying that this de-growth affects the GST revenues as well. If we de-grow by 20%, the overall GST also is less by 20%. We are really very concerned. We need very concrete measures,” Mr. Wadhera added.
