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TimesofIndia Business

Vehicle dispatches to dealers fall 19%, worst drop in 19 years

NEW DELHI: The auto slowdown intensified in July with sales dropping 18.7%, the biggest monthly decline in nearly 19 years, compared with 12.3% in the previous month, leaving the industry with a massive stockpile ahead of the festival season and generating demands for succour from the government.

Latest data released by industry body SIAM showed that dealership deliveries of cars and SUVs, two- and three-wheelers and commercial vehicles fell to 18.2 lakh units in July from 22.4 lakh units a year ago. The biggest drop was seen in the passenger vehicles (cars and SUVs) segment, where sales plummeted 31%.

Auto players blamed the economic slowdown and liquidity crunch for the slump as wholesale dispatches to dealerships dropped the most in nearly two decades, or since the 22% decline registered in December 2000.

Sales continue to drop despite automakers throwing in freebies and discounts to lure buyers, while also introducing newer models. Industry executives who met finance minister Nirmala Sitharaman on August 7 described the current downturn as the “worst slowdown in the industry’s history”.

Reduce GST to make vehicles affordable: Cos

Auto industry players have suggested that the government lower the GST on automobiles from 28% to 18%, arguing that it will improve affordability and may prompt people to come and buy.

Industry players believe that sentiments remain weak as stress on the economy has been rising. Top metro markets have been plagued by slower growth and subsequent job losses in key industry segments such as telecom, IT, real estate, and auto and components. Rural distress has only made matters worse, something seen in the reversal in demand for two-wheelers which fetch 50% of their volumes from the smaller towns and villages.

“This is an unprecedented crunch as all automobile categories have gone down. The pain is palpable, and we have seen layoffs, mostly contractual, across auto factories, dealerships and parts makers,” Vishnu Mathur, director-general of Siam, told TOI.

The industry – which is operating far below the installed production capacity levels — says that an early revival package is necessary, especially with the festive season approaching. “The industry is deeply concerned with the increasing pressure of low customer sentiment faced by the sector. The high insurance costs, rise in taxes and liquidity crunch across the non-banking finance segment, tightening of lending norms have significantly affected the domestic sales in the last few months,” N Raja, Deputy MD at Toyota Kirloskar Motor, said.

The industry also said that the government should lower the pitch regarding its call for migration of buyers towards electric vehicles.

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