Slowdown to further decelerate automobile production

New Delhi: With the ongoing sales slowdown showing little signs of abating, India's automobile industry might further decelerate production, leading to eventual job losses.

Apart from the slowdown, a weak Monsoon, inventory pile-up and stock management of BS-IV vehicles vis-a-vis BS-VI will hamper any production growth.

The automobile sector has been impacted the hardest among major manufacturing sectors due to a consumption slowdown and a weak Monsoon might just accentuate this trend.

Industry insiders opined that the slowdown is a culmination of high GST tax rates, farm distress, stagnant wages and liquidity constraints. "We can expect a further reduction in production in the form of stoppages due to continuing degrowth in sales of passenger vehicles," Grant Thornton India Partner Sridhar V said.

"OEMs would have to rework their strategy appropriately to balance inventory buildup of BS IV vehicles vis a vis BSVI vehicles considering this persistent slowdown. We cannot see the sentiments improving soon."

Figures from the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger car sales in June went down by 24.07 per cent to 139,628 units.

In the commercial vehicle segment, domestic sales were down by 12.27 per cent to 70,771 units last month. Additionally, overall sales of two-wheelers, which includes scooters, motorcycles and mopeds, edged lower by 11.69 per cent to 1,649,477 units.