The Indian auto sector is in dire straits and is facing a crisis not seen in the past two decades, jobs and manufacturing data released by an apex body representing the industry has shown. Around 2.30 lakh auto sector jobs have been lost while the sale of passenger cars in July 2019 fell 35 per cent compared to the same month last year, data released by the Society of Indian Automobile Manufacturers (SIAM) showed.
Speaking to reporters in New Delhi, the director general of SIAM said that it was the worst slump witnessed by the auto sector in the past 19 years. The previous such crisis was seen in December 2000, Vishnu Mathur, the director general, said.
SIAM data also showed that 300 dealerships have shut down in recent times and that one million jobs have been hit in the auto component manufacturing industry.
Overall, the auto sector witnessed an 18 per cent dip in sales in the month of July 2019. The worst hit was the passenger vehicle category, which saw a 35 per cent decline in sales. Sales of commercial vehicles declined 25 per cent while the sale of two wheelers was 16 per cent lower than July last year.
The SIAM data underscore the severe crisis the Indian auto sector finds itself in. Industry leaders have warned of massive job cuts as manufacturers look to halt production.
At the centre of the auto sector’s downturn is low demand caused by a lack of credit for car buyers and uncertainty due to upcoming regulatory changes. That, coupled by a lack of financing has spelt doom for the Indian auto industry.
Speaking to reporters in New Delhi SIAM’s director general Vishnu Mathur said that the auto industry needs a revival package from the government. The auto industry had a positive meeting with Union Finance Minister Nirmala Sitharaman recently, Mathur said, and the sector is hoping that a revival package will come soon.