The passenger vehicle sales in India saw the steepest fall in nearly two decades in July. Car sales to dealerships fell 31 percent to 200,790 units in July, marking the ninth straight month of drop, data from the Society of Indian Automobile Manufacturers (SIAM) showed.
The SIAM data also revealed that commercial vehicle sales fell by 25.7 percent to 56,866 units in the same quarter. The two-wheeler segment also witnessed a fall of 16.8 percent to about 1.51 million units.
SIAM said there was a 17 percent decrease in the domestic passenger vehicle production in July. Vishnu Mathur, Director General of SIAM, told media that there is an urgent need for government measures to revive the industry. He added that the industry is trying hard to get back the sales momentum and it requires government support to prevent the crisis from worsening.
Maruti Suzuki, India's auto manufacturing giant, witnessed a fall of 18.3 percent in its valuation since the beginning of the financial year. The country is facing a major crisis with its S&P BSE auto sector index falling about 23 percent in the first quarter.
Amid the liquidity crunch in the country, with the banking sector going on the back foot in terms of new credit, the demand for consumer goods is declining. This is the major reason behind the fall in car sales.
To cope up with the slumping sales and stagnant market, the Indian auto sector has been slashing employee count. The falling sales have also led to the closure of factories for days while the auto part suppliers are on the verge of shutting down completely due to lack of demand.
In an effort to restore the health og the auto sector, the industry demanded tax cuts and easier access to finance for dealers and buyers at a meeting with the Indian Government officials, last week.