NEW DELHI: The month of July saw India’s worst passenger car sales in 19 years. It was also the ninth straight month of auto sales decline. But the slump in auto sales in India is not limited to passenger cars, and hence it is a sign of a larger economic slowdown in the country.
Two-wheelers: In July, two-wheeler sales declined by over 16% to around 1.5 million units. Among two-wheelers motorcycles roughly contribute a little over 60% of the sales, with the rest accounted for by scooters. The sale of motorcycles is considered a proxy for the health of the rural economy, thus the poor sales in July reflect poor rural demand.
Three-wheelers: The sale of three-wheelers saw 7.66% fall in July. Three-wheelers are a mode of employment in the urban market — used for transporting people and goods. Thus a drop in sales of three-wheelers reflects lower employment. Also note, this is largely self-employment, the nature of employment the government said was healthy amidst talk of low jobs in India.
Trucks: The sale of commercial vehicles in the month saw a 25.71% decline. Of this, the sale of medium- and heavy-commercial vehicles saw a massive 37.48% decline. Sale of light commercial vehicles was down by 18.79%. Because medium and heavy commercial vehicles are largely used to transport industrial produce, a drop in their sales suggest lower production. The factor of self-employment comes into play in light-commercial vehicles too.
Domino effect: The poor sale of automobiles also have knock-down effects. According to the Federation of Automobile Dealers Associations (FADA), a body representing motor vehicle dealers, 286 dealerships shuttered in the 18 months ending April 2019. This affected 32,000 jobs. The crisis hasn’t abated since. In fact, as per an Indian Express report, the existing dealership has cut down jobs to keep costs in check, resulting in losses of about 200,000 direct and indirect jobs from May to July this year.
The body representing auto parts makers, the Automotive Component Manufacturers Association of India, has warned that nearly a million jobs could be lost if the situation continues. Auto parts makers, which sells to domestic vehicle makers as well as exports to nations near and far, is already facing concerns over the shift from internal combustion engines to electric motors in the long-term. A decline in auto sales causes short-term worries.
(The story originally appeared in Times Top10)