In the steepest fall in nearly 18 years, the domestic passenger vehicle sales declined by 20.55% in May 2019, prompting the industry to seek government support.

The decline in wholesale auto numbers continued mainly due to weak consumer demand, forcing manufacturers to undertake inventory correction.

The passenger vehicle sales declined to 2.39 lakh units last month against 3.01 lakh units in May 2018, according to the data released by industry body Society of Indian Automobile Manufacturers (SIAM) on Tuesday.

The data also showed that this was the steepest decline in passenger vehicle sales since September 2001, when the sales were down by 21.91%.

All-round decline

The sales across all vehicle segments, including two-wheelers, three-wheelers and commercial vehicles, were down in May, dragging the total vehicle sales down by 8.62% to 20.86 lakh units, from 22.83 lakh units in the year-ago month.

In the passenger vehicle segment, cars sales were down 26% to 1.47 lakh units, while those of utility vehicles and vans fell 5.64% to 77,453 units and 27% to 14,348 units, respectively.

Two-wheeler sales were down 6.73% to 17.26 lakh units, with motorcycles sales declining 4.89% to 11.62 lakh units and those of scooters down 7.87% to 5.11 lakh units.

Sales of commercial vehicles were down 10% to 68,847 units. “We have been seeing a decline across all segments of the industry in the last few months. The industry has not been able to recover since the floods in Kerala… there were factors such as high fuel prices, high insurance costs, and the NBFC issue…consumer sentiment is still low... The industry is still trying to correct inventory levels,” SIAM director general Vishnu Mathur said.

Seeks GST cut

Pointing out that the government had previously helped the industry in 2008-09 and 2011-12 with policy measures such as cut in excise duty, Mr. Mathur said amid such a market situation, it was time for the Centre to introduce steps to stimulate growth.

SIAM deputy director general Sugato Sen said that the industry body had asked the government to reduce GST on all categories of vehicles from 28% to 18%.

“The government should also come up with a vehicle scrappage policy. It would help create market for new vehicles… Time has come for serious intervention by the government for stimulating demand. We thought that post the elections, we will see some revival, but that has not happened,” he said.

Mr. Mathur, however, added that the industry was hoping that the situation might improve in the second half as a result of pre-buying before the change to BS-VI norms.