The automobile industry hit the skids in August with vehicle sales tumbling to a 22-year low — with still no sign that the Modi government is prepared to rummage through its toolkit of options to heave the industry out of a deep rut.

Passenger vehicle sales plunged 31.57 per cent year-on-year to 196,524 units in August, falling for the 10th straight month, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

Car sales plunged 41.09 per cent to 115,957 units.

More importantly, this now counts as the worst-ever fall in both the categories since the SIAM started recording data in 1997-98.

Data showed sales of two-wheelers had declined 22.24 per cent to 1,514,196 units, while sales of medium and heavy commercial vehicles had plummeted 54.3 per cent to 15,573 units. Sales of total commercial vehicles, including light commercial vehicles and goods carriers, fell 38.7 per cent to 51,897 units.

In the first five months of this fiscal, sales of passenger vehicles have sunk 23.54 per cent over the year-ago period to 1,109,930 units.

“We need measures that r not abt saving auto sector but abt saving 50% of manufacturing jobs in the country which is what Auto sector represents,” Biocon chairperson and managing director Kiran Mazumdar-Shaw said in a tweet, tagging finance minister Nirmala Sitharaman and transport minister Nitin Gadkari.

Production cuts

Trucks and commercial vehicles maker Ashok Leyland has been forced to cut production at its five plants across the country by 5 to 18 days as it struggles to deal with mounting inventories at dealerships.

The Hinduja Group flagship firm informed the bourses that it had declared 16 non-working days in September at its facility at Ennore (Tamil Nadu), its oldest vehicle making facility.

It has decided to suspend production at its Pantnagar (Uttarakhand) plant for 18 days. The Alwar (Rajasthan) and Bhandara (Maharashtra) plants will stop work for 10 days, and the Hosur facility in Tamil Nadu for five days.

Last month, the Chennai-based TVS Group auto component maker Sundaram Clayton, automobile major Maruti Suzuki, and two-wheeler maker Hero MotoCorp had announced the suspension of production at their facilitiesin tandem with weakening market demand. Tata Motors and Mahindra & Mahindra have also said they are suspending automobile manufacturing in order to adjust production with market demand.

No GST relief

The automobile industry has been clamouring for a cut in the GST rate to 18 per cent from the existing level of 28 per cent – in the hope that this will crank up sales during the festive season.

Gadkari had assured the industry that he would lobby the finance ministry to consider reducing GST rates on petrol and diesel as well as hybrid vehicles.

However, the fitment committee under the GST Council appears to have nixed the idea after estimating that the cut in the GST rate would lead to an annual revenue loss of Rs 50,000 crore. Several states have also opposed the proposal, fearing a decline in their revenues.

The next GST Council meeting will be held on September 20 in Goa.

The demand for rate cut comes at a time when the GST collections have slipped below an acceptable threshold of Rs 1 lakh crore in August, straining the Centre’s finances. The decline in tax collections, many believe, is indicative of the structural problems that have blighted the economy which saw growth in the first quarter (April-June) sink to a six-year low of 5 per cent.

This is the second time this year that GST collections have dipped below the Rs 1-trillion mark. It first fell below that mark in June when the collection was Rs 99,939 crore.