Falling sales likely to hurt jobs.
By R. Chandrasekaran
CHENNAI: Indian automobiles sector witnessed a fall of 4.08 percent in production in May. Over a two-month period—in April and May—domestic and exports sales dipped 0.64 percent and 8.62 percent, respectively. The drop in production and sales are likely to result in job losses in the sector.
The bad run of the car segment continued, as it recorded fall for the seventh straight month. Car sales slipped 12.26 percent in May to 143,216 vehicles from 163,222 units during the same period last year, data from Society of Indian Automobile Manufacturers (SIAM) reveals.
The lengthy stretch of straight drop in car sales has the industry insiders worried. SIAM Director General Vishnu Mathur said, “Even in the 2008-09 downturn there were no such prolonged period of fall. These are worrying times for the automobile industry.”
The overall economic sluggishness, high interest rates, higher inflation, lower consumer sentiments and job insecurity are blamed for the consecutive drop in car sales. Mathur said that reducing interest rate alone will not result in a turnaround and the consumer sentiments should get a boost, with a combination of factors such as a good monsoon and higher job security.
In April and May, passenger vehicles dropped 8.56 percent with cars and vans recording a fall of 11.33 percent and 10.88 percent respectively. However, the saving grace is a modest 4.08 percent rise in the sale of the utility vehicles in the same period.
The worst affected was heavy commercial vehicles, whose sales skid for the 15th consecutive month in May. Motor cycle sales recorded fourth straight monthly fall. For the two-month period, overall commercial vehicles sector recorded 5.2 drop with the sales of medium and heavy commercial vehicles dipping 12.11 percent and light commercial vehicles falling a moderate 1.36 percent.
Two wheeler segment sales in May were propped up by scooters sales that advanced 13.06 percent, whereas motor cycle sales slipped modestly by 0.72 percent. For the two month period, two wheelers recorded 1.04 percent upside despite mopes and motorcycles recording a drop of 11.45 percent and 1.38 percent respectively.
The current situation has obviously concerned SIAM, which fears that the current trend could certainly lead to a job loss in the sector. Though Mathur said that he wasn’t aware of any workers being laid off, he added that the process of laying off might have either started or could commence soon.