New Delhi: India’s domestic passenger vehicle sales in July dived at the steepest pace in nearly two decades, an auto industry body said, Tuesday, as a finance crunch deepened the crisis and triggered large-scale job losses in the auto sector.
Sales of passenger vehicles to car dealers plunged 30.9 per cent to 2,00,790 in July, the ninth straight month of declines, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. The drop in sales is the worst since December 2000, when the industry sold a fifth of the vehicles it sells currently.
The crisis in the auto sector presents a major problem for Prime Minister Narendra Modi’s government in his second term in office, as the sector accounts for nearly half of India’s manufacturing output. The auto industry employs over 35 million people directly and indirectly.
“If this industry goes down, then everything gets hurt. Manufacturing, jobs and revenue to the government,” Vishnu Mathur, director general, SIAM, told reporters Tuesday, adding that car and motorcycle manufacturers have already slashed about 15,000 jobs.
The pace of decline has accelerated in recent months, as a liquidity crunch in India’s shadow banking sector has dried up lines of credit to both auto dealers and potential car buyers.
This agency had reported last week that companies in the sector – which includes manufacturers, auto parts makers and dealerships – have so far cut as many as 3,50,000 jobs.
India’s jobless rate climbed to 7.51% in July from 5.66% a year earlier, according to private data group CMIE. This is because of the slowdown in the auto sector.
The latest auto sales figures imply that India’s GDP growth which has already slid to a near five-year low, is likely to show signs of further erosion for April-June when fresh data will be released later this month.
The auto industry asked for tax breaks and easier access to finance for dealers and buyers at a meet with government officials last week.
“The data shows an urgent need for a revival package from the government. The industry is doing everything possible to increase sales, but it needs government support to prevent the crisis from worsening,” Mathur told reporters.
Motorcycle and scooters sales fell 16.8 per cent to about 1.51 million units, while passenger car sales nosedived by 36% to 122,956 units. Commercial vehicles sales plunged by 25.7% to 56,866 units, SIAM said in a statement.
Reuters