Auto industry body Society of India Automobile Manufacturers (SIAM) on Monday said that it is concerned about overall vehicles sales, which fell for the sixth consecutive month in July.
The fall is not just in passenger cars, whose sales have declined for nine consecutive months now; utility vehicles, two-wheelers and commercial vehicle sales are also down.
Addressing reporters here, SIAM Director General Vishnu Mathur said: “Utility vehicles’ sales are down because of the increase in excise duty (30 per cent). Commercial vehicle sales have been declining for the last 17 months because of the slowdown in other industries, such as mining and infrastructure.”
He said the situation was similar to what prevailed in the early 1990s, but the industry was different at that time as it was not big. “It is a very serious situation for the industry. Original equipment manufacturers (OEMs) have started adjusting temporary and casual workforces,” he pointed out.
According to SIAM estimates, OEMs employ around two lakh workers.
Another five lakh work with component makers while four lakh are employed by dealers and service centres.
Mathur added that this is an appropriate time for the Government to give some relief to the sector by re-starting government purchase of vehicles for different departments, which had stopped in May last year as an austerity measure.
“The Government should also re-look at the excise duty, which has substantially risen (12 per cent for cars and 30 per cent for utility and heavy vehicles), road tax, state tax and national calamity contingent duty,” he said.
Mathur also pointed out that that the rupee’s depreciation against the Dollar was a major problem.
The currency’s sharp fall has pushed up the cost of imported parts.
He said segment-wise, mini cars (such as Maruti Suzuki’s Alto, A-Star and WagonR and Hyundai Motor India’s Santro and Eon) had done well in July.
In the two-wheeler segment, scooters had performed well. But the overall industry’s fate is still not known.
“The festival season should bring some cheer as demand should improve from rural areas as well. But, we don’t see much of a turnaround to the industry because of that,” he said.