As the downturn of the Indian economy continues, the latest updates from various industries show a grim picture. In automobile industry, passenger vehicle wholesales, along with the commercial vehicles, declined for the 11th consecutive month in September.
With the beginning of festive season failing to lift buyers’ sentiments, the industry continues to be in a prolonged downturn, said Society of Indian Automobile Manufacturers (SIAM) on Friday.
According to the data by SIAM, domestic passenger vehicle sales dropped by 23.69% in September to 2,23,317 units, down from 2,92,660 units in the same period a year ago, making it the 11th consecutive month of decline in vehicle off-take.
Domestic car sales were down 33.4% to 1,31,281 units last month against 1,97,124 units in September 2018. Motorcycle sales last month declined 23.29% to 10,43,624 units as against 13,60,415 units a year earlier.
Total two-wheeler sales in September declined by 22.09% to 16,56,774 units compared to 21,26,445 units a year ago.
Sales of commercial vehicles were down 39.06% to 58,419 units in September as compared with 95,870 units in the same period last year, SIAM said. Vehicle sales across categories registered a decline of 22.41% to 20,04,932 units from 25,84,062 units in September 2018, it added.
While in the passenger vehicle segment, Maruti Suzuki India witnessed a decline of 27.1% in its September sales at 1.1 lakh units. Hyundai Motor India marked a decline of 14.81% and Mahindra and Mahindra had a decline of 33%.
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In the case of two-wheeler category, Hero Motorcorp suffered a decline of 19.78% in sales. However, Honda Motorcycle and Scooter India’s decline in sales was about 12.4% to 4.55 lakh units. TVS Motor Company has also seen a decline of 32.66% in September.
The continuing low demand contributed to the massive slow down which the industry has been witnessing, especially in the last few months. So far, many have suffered and more job loss is feared in the upcoming days. The industry alone employs more than 3.5 crore people directly and indirectly. The auto sector contributes about half of total manufacturing output of Indian economy.
Many companies including Maruti Suzuki, Tata Motors and Ashok Leyland have slowed down their production and reduced the number of working days as well.
The downturn is not confined to auto industry. Official data released on Friday, October 11, said that the country’s total industrial output declined by 1.1% in August because of poor performance by manufacturing, power generation and mining sectors. This decline came after the index of industrial production (IIP) had showed an increase of 4.3% in July this year.
The detailed report said that the manufacturing sector, which contributes over 77% to the IIP, showed a decline of 1.2% in output during August 2019, against a growth of 5.2% in the same month of last year.
Electricity generation declined by 0.9% against an expansion of 7.6% in the same month a year ago while the growth in the mining sector was flat at 0.1%.
In a reflection of low investment activity in the economy, capital goods output contracted by 21% in August against a contraction of 7.1% in the previous month.
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In the onslaught of this slowdown, the Reserve Bank of India (RBI) had cut its economic forecast for 2019-20 to 6.1% which is fairly lower than the projection made in the August policy meeting. If this is what is going to happen, the country’s Gross Domestic Product (GDP) growth will be lowest since 2012-13. And this could lead to further job loss.
The Monitory Policy Committee (MPC), however, warned the government that more was needed on the policy front to arrest the slowdown rather than what the finance ministry has declared so far. The finance ministry had undertaken some reform spree measures including corporate tax rate cut.
“With inflation expected to remain below target... there is policy space to address growth concerns by reinvigorating domestic demand,” MPC warned the government.
(With inputs from PTI)