Auto sector crisis deepens

New Delhi/Bengaluru, Oct 11

Passenger vehicle sales slumped 23.7% in September, the 11th straight month of decline, prompting an industry body to flag more job cuts if sales failed to pick up soon.

Passenger vehicle sales dropped to 2,23,317 units in September, the Society of Indian Automobile Manufacturers (SIAM) data showed, while passenger car sales dived 33.4% to 131,281 units.

SIAM’s data comes as the domestic automobile industry faces a crippling slowdown in demand that has led to production cuts and thousands of job losses. The industry is seeing longest-ever streak of sales decline.

“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 some production as the industry grapples with various challenges amid a broader economic slowdown. The government stepped in last month, announcing a corporate tax rate to boost manufacturing and lift growth. On Friday, SIAM’s Wadhera said it expected some improvement in the situation on the back of the festive season.

However, Wadhera refrained from giving out a forecast for future sales, saying SIAM would maintain a cautious stance until October performance numbers are in.

Aggregate revenue for listed automobile companies is estimated to have dropped by one-fourth in July-September, Crisil, the Indian arm of S&P rating agency, said in a note on Thursday.

The drop in auto sales is also expected to hit earnings for insurance companies such as New India Assurance and ICICI Lombard General Insurance in the September quarter. — Reuters

In reverse gear 

• Passenger vehicle sales dipped to 2,23,317 units in September while car sales dived 33.4% to 131,281 units
• Car and auto component makers have cut thousands of jobs and halted some production as the industry grapples with various challenges amid a broader economic slowdown
• Aggregate revenue for listed auto companies is estimated to have dropped by one-fourth in July-Sept, as per to Crisil

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