Maruti-Suzuki Swift cars roll off the assembly line at a plant in Manesar in India's Haryana state. Photo: AFP

August sales numbers released by the Indian automakers’ body Society of Indian Automobile Manufacturers suggest that the ongoing slowdown in the automotive sector is going to be a long drawn-out one. There’s little relief in sight.

The passenger vehicle industry suffered its worst-ever monthly sales performance in August. Domestic sales of passenger vehicles plunged 31.6% to 196,524 units from a year earlier, according to data released by the automakers’ body. Sales of passenger cars declined 41% to 115,957 units.

It was the 10th straight decline in domestic passenger vehicle sales and the worst since the Society of Indian Automobile Manufacturers began compiling monthly sales data in 1997-98.

Owing to ongoing weak sales, automakers did not step up production as they fear that sales may not pick up in the coming months. Car sales in India are measured as factory dispatches and not retail sales.

On the bright side, utility vehicles weathered the slowdown to a great extent and their sales fell only 2% in August to 71,478 units, thanks to a slew of new models. The newly launched Hyundai Venue, Renault Triber, MG Motors Hector, Kia Motors Seltos and Mahindra XUV300 evoked buyer interest, bucking the industry trend.

In the commercial vehicle segment, sales of medium and heavy commercial vehicles declined 54% to 15,573 vehicles. Light commercial vehicles also declined by 28% year-on-year to 36,324 units.

Sales of two-wheelers declined 22% to 1.51 million units in August from a year ago. Motorcycle sales fell 22% to 937,486 units, while scooters also posted a 22% drop in sales to 520,898 units.

Automakers have already cut thousands of temporary jobs and warned the government of more job cuts if it does not intervene through a reduction in goods and services tax from 28% to 18%. The current slowdown has led several companies to freeze their investment plans for either building new factories or expanding existing facilities.

The next meeting of the Goods and Services Tax Council will be held on September 20. Some buyers have reportedly deferred their purchases hoping that the government will reduce tax on vehicles.

However, industry watchers point out that as consumption demand in rural markets has been hit by a decline in farm income and floods in different parts of the country, a turnaround in auto sales is unlikely in the coming months.

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