Hyderabad: The slowdown in the automobile sector has been continuing. Data released by major companies on Tuesday reveal that retail sales contracted as low as 55% in September.
While Maruti, Mahindra and Mahindra and Toyota posted 22%-40% sales contraction in August, the decline in September sales were pegged between 20% and 50%. Truck major Ashok Leyland is the worst hit with the highest sales decline of 56.57 per cent.
As per the Society of Indian Automobile Manufacturers (SIAM), car sales in April-June quarter touched the lowest point in nearly two decades.
Decline in all segments
The contraction in sales is seen in all the segments of automobile sector.
In passenger car segment - Maruti Suzuki India (MSI) reported a 24.4 per cent decline, Mahindra and Mahindra reported a 21 per cent decline and Toyota Kirloskar Motor reported a 16.56 per cent decline.
In two-wheeler segment Bajaj auto showed a decline of 22 per cent and TVS Motor reported 25 per cent sales decline in September.
In commercial vehicle segment Bajaj auto sales were down by 8 per cent whereas Mahindra & Mahindra was down by 18 per cent. Ashok Leyland reported the highest decline of 56.57 per cent in September.
Whereas, Tata Motors said its commercial vehicle sales in the domestic market shows a decline of 47 per cent.
Low sales growth across two-wheeler, three-wheeler, heavy vehicle segments shows the weak consumer demand in rural as well as urban areas and also indicates low commercial activities.
Automobile is the worst hit
In the current slowdown of the Indian economy, the automobile sector is the worst-hit sector. The industry employs nearly 30 million people directly or indirectly. As per the SIAM, It contributes 7 per cent of total GDP and 49 per cent of manufacturing GDP of the country.
So far 300 showrooms were closed and many of the companies are not renewing contracts of labour. Tata Motors and Ashok Leyland closed their factories temporarily in Pantnagar, Uttarakhand owing to the decline in demand for commercial vehicles (CV).
Recently TVS announced non-working days due to business slowdown in the sector.
Finance Minister's efforts
On 23 August, Union Finance Minister Nirmala Sitharaman tries to assuage the concerns of the sector. In the first round of growth boosting measures, the minister extended the registration date for BS IV vehicles up to 31 March 2020. In subsequent announcements, the corporate tax was also reduced to 22% from the earlier 30% in the hope that the benefits will be passed on to customers.
Despite the government's efforts, there is no positive movement in retails sales of automobiles.
Hopes on festive sales
Usually, automobile companies utilise festive seasons like Dussehra and Diwali to boost their sales. To clear the huge inventory, major companies announced price cuts. For instance, Maruti Suzuki announced Rs 1 lakh discount on Baleno model and Tata motors offered up to Rs 1.5 lakh benefits on premium models like Neon and Tiago in the hope that low prices will work as an antidote for the weak consumer demand.
