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Automobile sales still in free fall, see worst drop in August

Continuing the free fall, automobile sales in the country declined by 23.55% in August 2019 — the worst drop in monthly sales since the Society of Indian Automobile Manufacturers (SIAM) started recording wholesale vehicle sales data in 1997-98.

This follows the steepest sales decline of 18.71% in nearly 19 years in July 2019 witnessed by the industry reeling under a prolonged demand slump, mainly due to poor consumer sentiment amid slowing economic growth.

The vehicle sales across categories stood at about 18.21 lakh units in the last month, down from over 23.82 lakh units in August 2018, according to data released on Monday.

Domestic passenger vehicle sales, which comprise cars, utility vehicles and vans, contracted for the tenth straight month to about 1.96 lakh units down 31.6% from about 2.87 lakh units in August 2018. Sales of vans and cars were badly hit, falling over 47% to 9,089 units and 41% to nearly 1.16 lakh units, respectively. Utility vehicle sales fell 2.20% to 71,478 units.

Commercial vehicle sales — which are usually seen as an indicator of the economic activity in the country — tumbled nearly 39% to 51,897 units. As per the data released, sales of light commercial vehicles stood at 36,324 units, down 28.21% from 50,595 units a year ago, while sales of heavy commercial vehicles declined by a whopping 54.30% to 15,573 units.

Two-wheelers too

Similarly, total two-wheeler sales last month declined by a record 22.24% to over 15.14 lakh units. Motorcycle sales, which largely reflect the demand slump in the rural market, declined by 22.33% to about 9.37 lakh units, while scooter sales were down 22.19% to about 5.20 lakh units.

“While we have been expecting month after month that this [fall in sales] will bottom out, it doesn’t seem to be the case. Every time we look at the numbers, we see a decline. Now is a very crucial month as we head into the festive season. If we don’t see a recovery, even if a small one, this month and the next month, it will be a very alarming situation,” Ashim Sharma, Partner and Group Head, NRI Consulting & Solutions India, told The Hindu .

The industry, which has been forced to resort to job cuts given the tepid demand, has been pitching for a cut in current GST rates of 28% to boost sales.

A cut in GST may also help revive the sales in rural market, Mr. Sharma said.

He said consumers may be postponing purchases, hoping for a GST cut.

“Ideally, a decision in favour of the industry should be taken. But even if it is not, even then they should clarify that immediately.”

Asked about the fall in commercial vehicle sales, Mr. Sharma said the liquidity crunch due to the NBFC crisis is the likely reason.

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