Weak consumer sentiment amid tight liquidity conditions led to year-on-year de-growth of 6 per cent in vehicle registrations during July, the Federation of Automobile Dealers Associations (FADA) said on Monday.
Total vehicle registrations dropped to 16,54,535 in July 2019 from 17,59,219 in July 2018.
"Consumer sentiment and overall demand continued to be quite weak across all segments and most geographies," said FADA President Ashish Harsharaj Kale.
"The July sales continue to be in the negative zone year-on-year with two-wheelers at a de-growth of minus five per cent, passenger vehicles by minus 11 per cent and commercial vehicles at minus 14 per cent."
FADA India represents over 15,000 automobile dealers having 25,000 dealerships including 30 associations of automobile dealers at the regional, state and city levels accounting for 90 per cent of market share.
While the two-wheeler registrations dropped to 13,32,384 in July this year from 14,03,382 in the year-ago period, three-wheeler registrations were down to 55,850 from 54,250.
Commercial vehicle registrations edged lower to 23,118 from 26,815 in July last year while passenger vehicle registrations dipped to 2,43,183 in July 2019 from 2,74,772 in July 2018.
High inventory levels led FADA to categorise the near-term outlook as 'cautiously optimistic.' It said the consumer sentiment and demand continues to be weak and purchase postponement continues. Transmission of surplus liquidity and interest rate cuts are still not seen in retail lending.
The flood situation in many states is contributing to falling auto sales, FADA said in a statement.
A week ago, the Society of Indian Automobile Manufacturers (SIAM) said 10 lakh jobs are under threat in vendors or component manufacturing segment of the auto sector due to falling sales.
The auto industry employs over 3.5 crore people directly and indirectly. Representatives of major automobile manufacturers recently met Finance Minister Nirmala Sitharaman and sought the lowering of Goods and Services Tax (GST) from 28 per cent to 18 per cent.
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.
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