Car sales contine to skid on the bumpy road of high interest rates and fuel costs for a record ninth month in a row in July.
Car sales posted 7.4 per cent decline while that of heavy and medium commercial vehicles dipped for 17th month in succession. Industry body SIAM on Monday said auto sector has started retrenching temporary workers.
According to the latest data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales declined to 1,31,163 units in July this year from 1,41,646 units in the same month of 2012.
While total sales of commercial vehicles dropped by 14.93 per cent to 55,301 units from 65,008 units in the year-ago period, heavy and medium commercial vehicles (M&HCV) sales were down 19.88 per cent at 18,611 units.
“It is a very serious situation for the industry. The original equipment manufacturers (OEMs) have started adjusting temporary and casual workforce,” SIAM Director General Vishnu Mathur told reporters here.
While he did not share the exact number of temporary workers affected by the downsizing, Mathur said: “In the manufacturing sector, not restricted to auto sector alone, companies by and large tend to keep more temporary and casual workers.”
According to SIAM estimates, the OEMs employ a total of about two lakh workers, another five lakh by component makers while four lakh are employed at dealer and service centres. While Maruti Suzuki India (MSI) has already asked some of its temporary workers at the diesel engine plant at Manesar to go on indefinite leave, Toyota Kirloskar Motor also confirmed that it is “currently not renewing contracts of the temporary employees”, without specifying details.
Mathur further said the demand slump has affected across the segments. “For the total passenger vehicles, including cars, July was the 8th straight month of decline. Similarly, for motorcycles and grand total of all categories, it was the 6th straight month of decline.”
Total sales of vehicles across categories registered a decline of 2.08 per cent to 14,15,102 units in July 2013 as against 14,45,112 units in the same month of 2012.
He said in the wake of the continuous decline in automobile sales, SIAM has approached the Government seeking stimulus package, including reduction in excise duty, fleet modernisation and put an end to ban on new government vehicle purchase that has been on since May last year.
The overall economic factors, high interest rates, fuel prices and low sentiments continue to hurt demand, although new model launches such as Honda Amaze, Ford EcoSport have been able to bring “some excitement in the market”, he added. In July, market leader MSI posted 10.88 per cent increasein its domestic car sales at 63,040 units, while that of rival Hyundai Motor India were down by 5.67 per cent at 25,939 units. Tata Motors’ car sales were down by 59.59 per cent at 8,546 units during the month.
Exports up by 11.6% in July
In a rare bright spot in an otherwise struggling economy, exports grew by 11.64 per cent in July, the most in nearly two years, while imports dipped by 6.2 per cent.
The trade deficit was unchanged from $12.2 billion in June, putting pressure on the current account deficit and the fluctuating rupee. While exports soared to $25.83 billion in July, imports declined to $38.1 billion.
Gold and silver imports, which dipped by 34 per cent to $2.9 billion in July from $4.4 billion in the same period last year, helped to maintain the trade deficit at the June level.
Commerce Secretary SR Rao expressed hope that recently announced incentives, including a hike in the rate of interest subsidy, would help shipments to grow in the coming months. "We do hope that these measures would help us in improving our export target performance in the coming months...Continuing interest in Africa, latin America, Asean and Far East regions should be helping us (in increasing exports)," he told reporters here.