Auto sector seeks GST relief as vehicle sales dip 31 pc in July and job losses mount

Domestic passenger vehicle sales fell 30.9 per cent in July, marking a ninth straight decline in monthly sales amid prospects of 10 lakh job losses in the automobile and allied sectors.

The Society of Indian Automobile Manufacturers (SIAM) said on Tuesday that total passenger car sales were 2,00,790 in July 2019 as compared to 2,90,930 in July 2018. Two-wheeler sales were down by 16.82 per cent to 1,511,692 as compared to 1,817,406 in July 2018.

The auto sector accounts for nearly half of India's manufacturing output. "If this industry goes down, then everything gets hurt. Manufacturing, jobs and revenue to the government," said SIAM Director General Vishnu Mathur while addressing a press conference here.

He said SIAM data shows that commercial vehicle (including medium, heavy and light commercial vehicle) sales plunged by 25.71 per cent with 56,866 vehicles being sold in July 2019 as compared to 76,545 in July 2018.

Three-wheeler sales down by 7.66 per cent with 55,719 units being sold in July this year as compared to 60,341 sold in the same month last year.

Total vehicle (including two- and three-wheelers) sales were 1,825,148 as compared to 2,245,223 units sold in July 2018.

"The auto industry has witnessed 3.45 lakh job losses due to the slowdown. Nearly 300 dealership outlets have shut vanished, resulting in 2.3 lakh people losing jobs," said Mathur.

"Another one lakh job losses have been reported by auto component manufacturers and 15,000 job losses by original equipment manufacturers (OEMs). Besides, 10 lakh jobs are under threat in vendors or component manufacturing segment of the auto sector," he said.

The auto industry employs over 3.5 crore people directly and indirectly. Representatives of major automobile manufacturers met Finance Minister Nirmala Sitharaman last week and sought lowering of Goods and Services Tax (GST) from 28 per cent to 18 per cent.

"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," said Mathur.

The slowdown in auto sales stems from a severe liquidity crunch in the non-banking financial sector which has dried up lines of credit to both auto dealers and potential car buyers.