The SIAM has approached the government to extend a stimulus package, including excise duty cut and fleet modernisation of government departments, to revive demand.
NEW DELHI: In perhaps the worst slump for the Indian auto industry, sales of cars fell for a record ninth straight month in July and those of heavy and medium commercial vehicles slipped for the 17th month in succession, forcing automakers to seek a stimulus package.
Passenger vehicle sales posted the worst slide this fiscal so far with 8% fall in July as fuel price increases, high cost of finance, increased tax on utility vehicles and persistent economic slowdown kept many potential car buyers away from showrooms.
The Society of Indian Automobile Manufacturers (SIAM) has approached the government to extend a stimulus package, including excise duty cut and fleet modernisation of government departments, to revive demand even as the sector has started retrenching temporary workers.
"It is a very serious situation for the industry," Vishnu Mathur, director general of SIAM, said. "The automakers have started adjusting temporary and casual workforce in consonance with the market demand," he added.
The association also pointed out there is a sharp decline in demand for utility vehicles, which was the fastest-growing vehicle segment in the past one year helped by strong demand for successful launches such as Renault Duster and Maruti Suzuki BSE -0.52 % Ertigo. The segment posted a 18% decline in July, its steepest since May 2009.
Passenger vehicle sales posted the worst slide this fiscal so far with 8% fall in July as fuel price increases, high cost of finance, increased tax on utility vehicles and persistent economic slowdown kept many potential car buyers away from showrooms.
The Society of Indian Automobile Manufacturers (SIAM) has approached the government to extend a stimulus package, including excise duty cut and fleet modernisation of government departments, to revive demand even as the sector has started retrenching temporary workers.
"It is a very serious situation for the industry," Vishnu Mathur, director general of SIAM, said. "The automakers have started adjusting temporary and casual workforce in consonance with the market demand," he added.
The association also pointed out there is a sharp decline in demand for utility vehicles, which was the fastest-growing vehicle segment in the past one year helped by strong demand for successful launches such as Renault Duster and Maruti Suzuki BSE -0.52 % Ertigo. The segment posted a 18% decline in July, its steepest since May 2009.
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Utility vehicle sales was growing in high double-digits till March, when it posted a 34% increase over the previous year, but the demand started dropping from April onwards when growth came down to just 4% after the government had hiked excise on such vehicles.
"The situation is grim. The negative sentiments have now impacted the UV sales too, despite a host of new launches like Ford EcoSport and Chevrolet Enjoy in recent months," Mathur said. "The increase in excise duty on this class of vehicles is now visible."
The persistent fall in sales has already made carmakers such as Maruti Suzuki BSE -0.52 % India and Toyota Motors retrench some of their temporary work force to prune production and control inventory.
As per available data, the Indian auto industry directly employs around two lakh workers into manufacturing of vehicles, while another five lakh are working with the component industry. There are about four lakh people working at the auto dealerships and the service centres.
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