NEW DELHI: Passenger Vehicle (PV) sales registered its steepest decline in 18 years last month. According to data from the Society of Indian Automobile Manufacturers (SIAM), domestic PV sales fell 20.55 per cent in May 2019 to 2,39,347 units against 3,01,238 units in the year-ago month.
The decline last month is the worst since September 2001, when sales had dropped by 21.91 per cent. Barring the festive month of October, PV sales had been in the negative territory during 10 of the last 11 months. While utility vehicle sales declined 5.64 per cent last month, passenger car sales registered a bigger fall of over 26 per cent.
Auto industry has now sought policy intervention from the government to revive sales. SIAM deputy director general Sugato Sen said, “Time has come for some serious intervention to be made by the government for stimulating demand in the market.”
One of the key demands being made by automakers is a cut in GST rates on the sector from 28 per cent to 18 per cent. Auto-component makers have also sought a uniform GST rate of 18 per cent instead of two rates at 18 per cent and 28 per cent.
With GDP growth slowing down to 5.8 per cent in the quarter ended May, and unemployment running high, weak consumer demand has hit the bottom lines of firms in many sectors and has been a cause for worry for India’s policymakers, who are currently working on the Union Budget.
The industry blamed multiple factors including a liquidity crisis in India’s shadow banking and higher insurance cost to have muted consumer sentiment. Analysts had earlier hoped that sales would pick up post general elections, but this has been belied.
SIAM officials said cuts in GST will help automakers to reduce total cost and pass on the benefits to consumers. Sen said the government should also come up with a vehicle scrappage policy, which would help create a market for new vehicles.
Faced with low demand, the industry has been cutting production across segments. In May, the cut across segments stood at 7.97 per cent.