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The downturn in automobile sector worsened with sales shrinking further to record the steepest ever fall in August, a record fall in 10th straight month, and huge job losses coming in its wake.

Passenger car sales declined by 41 per cent year-on-year (YoY) in August to 1,15,957 units as compared with 1,96,847 units in the same month last year, media reports said.

As per the latest report shared by Society of Indian Automobile Manufacturers (SIAM), the passenger vehicle sales domestic market also declined by around 32 per cent to 1,96,524 units during last month as against 2,87,198 units in the corresponding month last year.

Passenger car sales fell 41.09% to 115,957 units.

This is the worst-ever fall for both the categories since SIAM started recording the data in 1997-98. Truck and bus sales dropped 39%. Two-wheeler sales fell 22% to 1.5 million units.

The slump in auto sales had led to massive job loss in the sector. Automakers, parts manufacturers and dealers have laid off about 350,000 workers since April, Reuters reported. Companies from Suzuki Motor Corp.’s local unit to Mahindra & Mahindra Ltd. have cut production and laid off workers to cope with the slowdown.

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Hinduja Group flagship firm Ashok Leyland today – Monday, Sep 9 – announced non-working days at its various manufacturing facilities following weak demand. “Following are the non-working days at our various plant locations during September 2019 due to continued weak demand for our products”, the company said in a BSE filing.

The move by the company follows slowdown in the automobile sector that has forced many manufacturers and component suppliers to cut production and plan temporary plant closures.

Accordingly, Chennai-based heavy commercial vehicle major has announced 16 non-working days for its facility in Ennore, five days at Hosur (Tamil Nadu) unit, 10 days each in Alwar (Rajasthan) and Bhandara (Maharashtra) unit and 18 days in Pantnagar (Uttarakhand) facilities.

Last month, Chennai-based TVS Group auto component maker Sundaram Clayton, automobile major Maruti Suzuki, and two-wheeler maker Hero MotoCorp had announced a suspension of production at their facilities in line with market demand. Maruti Suzuki, India’s largest carmaker, had last week said it has suspended production at its Gurugram and Manesar plants in Haryana for two days. Maruti Suzuki has closed both plants simultaneously for two days for the first time.

Market leader Maruti Suzuki India had reported a 36 per cent YoY decline in sales during August to 93,173 units (1,45,895 units).

Hyundai Motor India also reported a double-digit YoY decline in sales (17 per cent) to 38,205 units (45,801 units in the same month last year).

Honda Cars India and Tata Motors, in particular, reported the most dismal numbers, selling less than half of the units they sold last year in August.

In the commercial vehicle segment, the sales declined by 39 per cent to 51,897 units in August, a drop of 39 per cent YoY as compared with 84,668 units in August 2018.

In the two-wheeler segment, both scooter and motorcycle sales declined by a little more than 22 per cent YoY. While the scooter sales during the month were recorded at 5,20,898 units (versus 6,69,416 units), the motorcycle sales fell to 9,37,486 units (against 12,07,005 units).

Two-wheeler makers including Hero MotoCorp, Honda Motorcycle and Scooters India, Bajaj Auto and TVS Motor also had reported a decline in sales during August.

Three-wheeler sales also declined by 7 per cent YoY to 58,818 in August as compared with 63,199 units in the same month last year.

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The automobile sector requires an immediate decision from the government on GST reduction (from 28 per cent to 18 per cent) which may help boost sales during the festive season, said media reports on basis of inputs from companies and industry leaders.

Recently, at the SIAM and ACMA conventions, the industry demanded a quick intervention from the government on reducing GST, at least for some time, to gain back the sentiments in consumers.

However, the GST fitment committee that held a meeting for two consecutive days last week suggested no assurance for any GST cut for the automobile sector.

The industry has to wait for the GST Council meet on September 20 for a holistic picture and if they get any relief from the decisions that are made on the day.

Narendra Modi government has lifted a ban on new vehicle purchases by state-run departments and offered other concessions. Transport Minister Nitin Gadkari last week said he’ll convey a demand for a lower levy on petrol and diesel vehicles to the finance minister.

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