Even as car dealers from across the country met in Delhi on Wednesday for a conclave on "Automobile Retail Industry, its Challenges & moving towards a better profitability growing Economy", bad news came from the country's largest carmaker. Maruti Suzuki India Limited announced that it will stop production for two days on September 7 and 9 at its Gurugram and Manesar plants. The last time this happened was in May this year when it was shut for a day.
In order to help the auto industry, which is facing its worst slowdown in 20 years, the government on August 23 had announced 30 per cent depreciation for new vehicles and had lifted the ban on purchase of vehicles by government departments.
But dealers now admit that 2 lakh jobs have been lost not counting cuts in car factories or ancillary units. They want the government to cut the GST from 28 per cent to 18 per cent and make loans easier for customers.
"Close to 2 lakh jobs have been lost between April and July 2019.The measures which the Finance Ministry has announced that happened only 10-12 days back. The effects of that will be seen only this month and we are hoping for positive outcome. Regarding GST government is the best to analyse that. We have asked them to ensure that demand is boosted," said Ashish Kale, president of FADA (Federation of Auto Dealers Associations).
"For us one main demand was that there should be availability of credit for retail sales also. There is an aggressiveness in the NBFCs (non-banking financial companies) sector to do retail loans. The ministry has recommended that and we are seeing the NBFCs return to us and discussing the festival season," added Mr Kale.
Rajan Wadhera, president of SIAM (Society of Indian Automobile Manufacturers) while addressing the car dealers at the auto conclave said, "Inventory has been piling up and the road ahead for the rest of the year also looks difficult as migration takes place from BS-IV to BS-VI vehicles."
"In my 38 years of experience in the industry and and last 15 years of being deeply involved in technology BS-VI is the biggest challenge that we are facing. To make the shift within 3 years and have defect free products is a huge challenge," he further said.
Maruti's sales in August fell by almost 33 per cent, the worst ever for the company. More worryingly, even sales of its mini cars, usually seen as most affordable, fell almost 72 per cent. This was the third month in a row that Maruti dispatched less than 1 lakh cars to dealerships in a particular month since July 2017.
Maruti dealers tried to play down the crisis but industry representatives are very concerned. John K Paul, a Maruti dealer said, "Industry as a whole is seeing a downward trend. Maruti particularly is not slowing down. Our Onam may be reasonable good. Not as good as last year though."
"This is not good for business as a whole. We need to sell vehicles to survive.We planned for a sale of 100 but are selling 60," said Vinkesh Gulati, vice-president of FADA.
Automobile sales in the country crashed by 29 per cent in August 2019 over last year marking the tenth straight month of decline. The industry is hoping that with Ganesh Chaturthi and Onam, the festive season might bring some respite.