India's car sales plunge 33.4% in September as slowdown extends to 11th month

India's passenger vehicle sales slumped 23.7 per cent to 2,23,317 units in September, on the back of a 33.4 per cent decline in passenger car sales to 131,281 units, data released by industry body the Society of Indian Automobile Manufacturers (SIAM ) showed.

Sales of commercial vehicle were down 62.11 per cent in September. This means the slump in vehicular sale has continued in the eleventh straight month at a time when the country's auto sector is facing one of the worst slowdown in decades.

According to SIAM data, passenger vehicle sales dropped to 2,23,317 units in September from 2,92,660 a year ago while passenger car sales dropped by 33.4 per cent to 131,281 units compared to the same period in 2018.

Total passenger vehicle production declined by over 18 per cent to 2,79,644 units in September compared to the figure of 3,41,539 units in September last year.

Total production of commercial vehicles dropped by 72.07 per cent in September against the same period last year. In terms of exports, the commercial vehicle sales dropped by 45.06 per cent.

However, the passenger vehicles segment showed export growth of 5.64 per cent in September compared to the same month last year.

Two-wheeler segment also recorded a two-digit decline in production and domestic sales in September. On year-on-year basis, scooter sales in September declined by 16.60 per cent while motorcycle sales fell 23.29 per cent. Production declined by about 16 and 19 per cent, respectively.

SIAM's data flags concerns of more job cuts in the industry, one of the country’s largest employers, if sales failed to pick up soon. India’s domestic automobile industry faces a crippling slowdown in demand that has led to production cuts and thousands of job losses.

"We are preparing for best-case and worst-case scenarios ... worst case there will be more production and job cuts," said SIAM president Rajan Wadhera.

Car and auto component makers have cut thousands of jobs and halted production of some lines as the industry grapples with regulatory challenges amid a broader economic slowdown. The government’s decision last month to cut corporate tax rate to boost manufacturing and lift growth did not find with much success.

Wadhera said it expected some improvement in the situation on the back of the festive season. However, he refrained from giving out a forecast for future sales, saying SIAM would maintain a cautious stance until October performance numbers are in.

The drop in auto sales is also expected to have a ripple effect by hitting earnings for insurance companies such as New India Assurance and ICICI Lombard General Insurance in the September quarter.

Last month, car companies such as Maruti Suzuki India have lowered prices on some models, responding to the government's move to cut corporate taxes in a bid to revive economic growth.

The company saw a 24.4 per cent drop in sales in September. Aggregate revenue for listed automobile companies is estimated to have dropped by one-fourth in July-September, CRISIL ratings said in a note on Thursday.

Low demand in recent months has led to a massive slowdown in the auto sector of the country which is the fourth largest in the world. A massive job loss is feared in India's automotive industry, which employs more than 35 million people directly and indirectly. The auto sector accounts for about half of total manufacturing output of Indian economy.

To tackle the slowdown, several auto companies, including Maruti Suzuki, Tata Motors and Ashok Leyland, have resorted to production cuts, forced leaves and staggering of working days.