Auto Sector Crisis Deepens, GDP Will Fall Heavily

Aug 14 2019 11:16 AM
Auto Sector Crisis Deepens, GDP Will Fall Heavily

The recession is becoming more frightening due to a fall in demand in the auto sector. In July this year, vehicle sales registered the fastest decline in 19 years. According to the latest data from THE SIAM, the total vehicle sales in the country declined by 18.71 percent in July. In the last three months, 15,000 people have lost their jobs due to the slump in the automobile sector. SIAM says that if the industry continues to decline, it will have an impact on the country's GDP as well. Meanwhile, representatives of the auto industry are continuously pleading for a relief package from the government. To improve the situation, the industry has also sought to bring down the GST rate from 28 to 18 percent. SIAM also reiterated these demands while releasing the July 2019 sales figures on Tuesday. "The latest sales figures show how deep the industry needs a relief package," said Siam Director General Vishnu Mathur.

According to the recent SIAM data, sales for each section of the auto sector have declined. The total sales of passenger vehicles and two-wheelers were 18,25,148 units, while in July last year, there were 22,45,223 units of sales in this category. Earlier in December 2000, the automobile industry recorded the highest decline of 21.81 percent. The decline in sales is so sharp that companies have recorded an 11 percent decrease in production in July this year. There is no scope for further improvement in the situation, as Tata Motors and Mahindra & Mahindra have recently decided to halt production for a few days. In July, sales of 200,790 vehicles were recorded, down about 31 percent from the July figure (2,90,931) last year.

As far as two-wheelers are concerned, sales have declined by 16.82 percent during July. Two-wheeler companies sold 15,11,692 units of vehicles this month. As against this, 18,17,406 two-wheelers were sold in July last year. The decline in sales has also continued in commercial vehicles. Sales of these vehicles declined by 25.71 percent in July 2019. Mathur says the industry is making every effort to encourage sales. 'But now is the time when the industry really needs the government's help.' he said, adding that the relief package is needed to bring the industry back on track and prevent a drop in sales.

For your information, Mathur said that in the last two to three months, about 15,000 jobs have been lost in automobile manufacturing companies. Most of these jobs are temporary and casual-level. In addition, millions of jobs in the component industry are also looming over the crisis cloud. Moreover, according to Mathur, about 300 dealers have been forced to close their business due to a fall in sales. It has also affected the jobs of two lakh people. Mathur said this time the recession is quite different and deeper than the previous recession. In 2008-09 and 2013-14, part of the automobile sector was a part of which was driving up sales. But this time the entire sector is in recession and sales are coming down.

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