'Rock bottom': Passenger vehicle sales plunge 31%, steepest in two decades

The downward spiral continued for Indian automakers in July as sales fell by 18 per cent over the same month last year.

Sales of passenger vehicles declined by 30.98 per cent, the steepest fall in two decades, and industry executives are now counting on a good monsoon to revive them in the festive season.

“What is ‘rock bottom’? Each month we feel it’s rock bottom. If we look at the numbers for last month, we thought they were very low, but this time they are breaking an almost 19-year record. You can never say this is the worst,” said Vishnu Mathur, director general, Society of Indian Automobile Manufacturers (Siam).

Sales have been going down since July last year, leading to automakers cutting production. While original equipment manufacturers (OEM) have not yet resorted to job cuts, ancillary companies have been doing so because orders have dried up for them. 

Siam has raised an alarm, saying the prolonged slowdown has destroyed 15,000 jobs and, without an immediate intervention by the government, there will be more.

“Job losses till last count were at 15,000 and mostly in the equipment supply sector,” Mathur said, adding that those sloughed off were mostly temporary workers.

“More than 300 automobile dealerships have closed down so far. The industry needs an urgent revival package from the government.”

The passenger-vehicle segment (including cars, utilities, and vans), with overall sales of 200,790 units, has had the worst showing since December 2000, when sales were down 35.22 per cent. 

Car sales are 35.95 per cent down YoY, which is not far from the 39.86 per cent drop in December 2000.

The commercial-vehicle segment is also down at 56,866 units, lower by 25.71 per cent. Medium and heavy commercial vehicles, which are the backbone of the automobile sector, are down 37.48 per cent at 17,722 units. Light commercial vehicles are down by 18.79 per cent at 39,144 units.

The two-wheeler segment, which a year ago was firing on all cylinders, is down 16.82 per cent with all three sub-segments — scooters, motorcycles, and mopeds — down in double digits.

The three-wheeler segment, with sales of 55,719 units, is down 7.66 per cent and the sole one with single-digit negative growth.

“We believe there is going to be an improvement in sentiment as you get into the second half (of the financial year), which will be partially reflected during the festive season. We expect a good monsoon to bring some cheer to rural markets, so better participation by the rural sector is likely to create some positive impact in the second half,” Niranjan Gupta, chief financial officer at the largest two-wheeler player, Hero Motocorp, recently told analysts.