Passenger Vehicle Sales Fell The Most In Nearly 18 Years, Says SIAM
Sales of cars and utility vehicles fell the most in nearly 18 years in May as the slowdown in demand, which started since festival season last year, continues.
The domestic passenger vehicle sales declined 20.55 percent year-on-year to 239,347 units last month, according to data released by the Society of Indian Automobile Manufacturers. That’s the steepest since September 2001 when passenger vehicle sales fell 21.91 percent, it said. Domestic car sales in May declined 26.03 percent over last year to 147,546 units.
There’s been a decline across segments since the last six months that started with the Kerala floods, Vishnu Mathur, director general of SIAM, told BloombergQuint during an interview. The inventory correction has been going on ever since as the industry has resorted to production cuts, he said.
Demand for automobiles have been falling since Diwali festival—usually a strong period for sales—due to increased upfront insurance cost and higher fuel prices. Year-end discounts, too, failed to lift sales, leading to piling up of inventory at dealerships. Contract workers have become the first victim of this slowdown in an industry where nearly half of the labour force comprises such workers.
Here’s how sales in other segments have fared in May:
- Motorcycle sales declined 4.89 percent year-on-year to 11,62,373 units.
- Two-wheeler sales fell 6.73 percent to 17,26,206 units.
- Sales of commercial vehicles were down 10.02 percent to 68,847 units.
Still, Mathur is optimistic that demand will pick up in the second half of the year as there is a stable government in place. Also, the ongoing inventory correction and pre-buying prior to the implementation of new emission (BS-VI) norms will have a positive impact on the sector, he said.
But Mathur also said the government’s intervention is much needed at this point to help the industry to come out of the slowdown. Besides requesting a cut in the goods and services tax rate to 18 percent from 28 percent, he said the government should set up a voluntary scrappage policy for removing old vehicles.
If there’s no intervention and things don’t improve, suppliers will start to feel the heat, he said. “There’s a need for a stimulus package by the government to tide away these difficult times.”
With inputs from PTI