Passenger vehicle sales in India dropped the most in nearly two decades, with the decline extending for a ninth straight month amid a broader slowdown in Asia’s third-largest economy.
Car sales fell 36% from a year earlier to 122,956 units in July, data released by the Society of Indian Automobile Manufacturers showed. Passenger vehicle sales slumped 31%, while truck and bus sales fell 26%.
Weak sales are forcing manufacturers to cut production or shut factories temporarily, leading to at least 15,000 job losses in the industry so far, Vishnu Mathur, the director general of Siam, said in New Delhi on Tuesday. The trend mirrors waning consumer confidence in an economy, whose growth has slowed to a five-year low, and where unemployment has risen to a 45-year high.
“The job losses till last count was at 15,000 and was mostly in equipment supply sector,” Mathur said, adding that those let go were mostly temporary workers. “Over 300 automobile dealerships have been closed so far. The industry needs an urgent revival package from the government.”
India is planning measures to stimulate the economy, with an announcement expected this week to boost demand in automobiles and housing sectors, among others, a government official said. That’s expected to add to monetary stimulus provided by the central bank, which has cut interest rates four times this year to boost demand.
Besides car sales, most economic indicators from demand for bank loans to output of infrastructure sector suggest weakness. GDP expansion was at 5.8% in first three months of this year, and data for quarter ended June is due August 30.
Two-wheeler sales — a key indicator for demand in rural India — fell by 17% year-on-year to a little more than 1.5 million units in July. Sales of trucks and buses dropped the most since February 2014.
Sales are expected to pick up during India’s festival season, starting next month, but a delay in government support will hinder a consistent return to sales growth, according to Siam.