NEW DELHI: Sales of passenger vehicles (PVs) shrank to a new low during the month of August. According to data released by Society of Indian Automobile Manufacturers (SIAM), PV sales in the domestic market declined by around 32 per cent to 1.96 lakhs during the month gone by as against 2.87 lakh in the August last year.
This is the second consecutive month when total dispatches of PVs from factories to dealer-showrooms fell by over 30 per cent. In July, PV sales fell nearly 31 per cent to 2 lakh.
A liquidity crunch arising from a shadow banking crisis, regulatory factors that made vehicle ownership expensive on top of a general slowdown in economic activity has led to a prolonged slowdown in demand for automobiles across the segment, analysts said.
Within the PV segment, passenger car sales declined by 41 per cent year-on-year (YoY) in August to 1,15,957 units, while utility vehicle sales, despite multiple launches, fell over 2 per cent to 71,478 units.
Vehicle sales across categories registered a decline of 23.55 per cent to 18,21,490 units from 23,82,436 units in August 2018. All vehicle categories witnessed a decline in sales during the month.
In the commercial vehicle segment, sales declined by 39 per cent to 51,897 units in August 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.
Many in the industry have said that a stimulus package announced by the Finance Minister Nirmala Sitharaman on August 23 might not help much in reviving demand and the sector requires an immediate decision from the government on reducing GST from 28 per cent to 18 per cent to boost sales.
“The ability of the industry to provide large discounts is limited and this only highlights the need for Government to consider reducing the GST rates from 28% to 18% which would significantly reduce the cost of vehicles and in turn create demand," SIAM President Rajan Wadhera said
While Union transport minister Nitin Gadkari last week said that demands for reduction in GST are understandable and that he would discuss it with the Finance Minister, especially as prices of cars and trucks are expected to go up significantly with new engines (termed BS-VI compliant) which can handle cleaner fuel being compulsorily introduced, the industry still remains sceptical as it has received no assurance from the GST fitment committee that held a meeting for two consecutive days last week on their demand.
The industry is now waiting for GST Council meeting on September 20 for a clearer picture. Speaking at the Siam convention last week, Tata Motors CEO and Managing Director Guenter Butschek said Indian automobile industry growth story is about to collapse due to ongoing slump triggered by a variety of factors, including low consumer sentiment and credit liquidity crisis.
Speaking at the annual convention of Society of Indian Automobile Manufacturers (SIAM), Butschek, however, said he was cautiously optimistic about a recovery from the current situation on the back of measures announced by the government.