Maruti Suzuki, Honda and Mahindra and Mahindra were among the car makers to report a double-digit drop in car sales in July, prompting the industry to turn to the government for stimulus and RBI for a cut in rates to boost demand.

Sales of market leader Maruti Suzuki skid 33.5 per cent in July to 109,264 units, while Honda Cars India reported a 48.67 per cent decline in domestic sales at 10,250 units. Mahindra and Mahindra’s total sales fell 15 per cent to 40,142 units last month.

Maruti suffered the sharpest drop in sales in the last two decades owing to the economic slowdown, tightening of credit rules by financial institutions and a high base effect of the first half of the previous fiscal.

Moreover, the government’s proposal to increase registration charges on new vehicles 10-20 times is likely to make things more difficult in an industry already battling an unprecedented slowdown in demand, industry body Society of Indian Automobile Manufacturers has said.

In its recent draft notification, the ministry of road transport and highways has proposed to increase the registration charges on new trucks or buses to Rs 20,000 from Rs 1,500, two-wheelers to Rs 1,000 from Rs 50 and cars to Rs 5,000 from Rs 600.

“The deceleration in the automobile industry intensified last month amid weak buying sentiment and overall slowdown. We are also witnessing a lot of postponement of purchases. It is extremely worrisome since the July 2019 decline is much severe than the Q1 decline,” Rajesh Goel, senior vice-president and director (sales and marketing) at Honda Cars India Limited said.

M&M chief of sales and marketing (automotive division) Veejay Ram Nakra said the industry needed stimuli to help to revive demand. “We hope the overall buying sentiment will improve in the run-up to the festival season and with the monsoon turning out to be better than initially anticipated,” Nakra said.