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The Auto Sector is Slowing Down: Passenger vehicle sales decline by 24%, commercial by 62%

The auto sector of India has been slowing down and has been in recession due to weak demand. SIAM (Society of Indian Automobile Manufacturers) data for September 2019 has shown that the fall in passenger vehicle sales was roughly 24 percent and that in commercial vehicle sales was around 62.11 percent. This drop can be seen even during the festive season when people are more keen to buy new vehicles. There has been uncertainty over a planned cut in the GST  (Goods and Services Tax) rate for cars. This has kept the potential customers away from buying for the month of September 2019.


It is one of the worst slowdowns in the Indian Auto market. The latest SIAM data for September 2019 has shown that vehicle sales (both passenger and commercial) continued to fall.


As per the SIAM data, the passenger vehicle sales dropped to 2,23,317 units in September 2019 from 2,92,660 while the commercial car sales had dropped by 33.4 percent to 131281 units as compared to 2018.

Declining demand in the previous months has resulted in a massive slowdown in the auto sector of India (the fourth largest in the world). A massive loss of jobs may happen in the Indian automotive industry, which employs approx more than 3.5 crore people directly and indirectly. The auto sector of India is responsible for around 50% of the total manufacturing output of the Indian economy.

To tackle this crisis, there are several auto companies that have been resorting to declaring non-working days. This plan has been chosen by companies that include auto majors such as Maruti Suzuki, Tata Motors and Ashok Leyland. A non-working day is basically a forced leave without pay. This initiative is taken up by the auto majors to reduce the production of vehicles in their factories.


The SIAM data showed that the total commercial vehicle production had reduced by around 18 percent to 2,79,644 units in September 2019 as compared to the figure of 3,41,539 units in September 2018. The production of total commercial vehicles has declined by 72.07 percent in September 2019 against last year's production. In the export sales, commercial vehicle sales have declined. by 45.06 percent.

Although there is good news on the export sales front, for the passenger vehicles which has shown a growth in the exports of 5.64 percent in September 2019 as compared to the same month in 2018. 

The two-wheeler segment has also recorded a major decline in production and domestic sales in the month of September 2019. On a year-on-year basis, the sales of the scooters in the month of  September 2019 has reduced by 16.60 percent while the sales of motorcycles have fallen by 23.29 percent. Their production declined by about 16 and 19 percent respectively on a year-on-year basis.

All the auto majors have seen a very high double-digit fall in the month of September. Maruti Suzuki has seen a 27 percent drop while its rival auto firm Hyundai had seen a 14.8 percent fall. On the other hand, Tata Motors has received the heaviest fall at 56 percent which is followed by Nissan company at 55.6 percent, then comes Honda at 37 percent, Ford at 32.5 percent and lastly Mahindra at 28 percent. All of this decline has taken place in the month of September 2019.

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Quartz

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