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Automobile industry in crisis

New Delhi, Mar 11 () : Automobile industry in terms of passenger car sales and commercial vehicles recorded a fall, the steepest in twelve years.

Automobile sales declined by 25.71% to 158,513 units in the previous month. It is the fourth time in a row that sales are dipping. Automobile makers’ body puts the dip due to the economic conditions in India. Total sales of domestic passenger car sales was 213,362 units in February last year.

Not only car sales, even two-wheeler sales were down 4.6%. According to data released by manufacturer’s body for the first 11 months of the fiscal year ending in March, the industry is bracing for first annual sales fall in a decade.

Last year in February, 837,743 units were sold but this year it is 8,00,185 units. The decline last year was 2.77%.

Auto majors Maruti and Tata Motors started cutting production due to dip in sales after a 70 per cent drop in sales. Companies are having two months inventory while it is usually a 20 day stock. Factories started single shifts from January.

Maruti, the top seller of cars is shutting down for one day in Gurgaon while Tata has now decided to make Nano only on demand and have resorted to five block closures in Jamshedpur, and sacked 2,000 temporary workers.

Only Chennai-based Hyundai and Nissan are working three shifts. Tata’s vehicle sales have fallen by 29 per cent in April 2012-January 2013.

General Motors too, closed factories for three days a month in Talegaon and Halol;the no-production days were in place by around 20 per cent to cut its production.

The worst slump was in 2002-2003 when vehicle sales dropped by 2.09 % where even economy slowed down in 2008-2009, sales shot up by 1.39%.

Nissan is soon to launch Datsun model priced at Rs four lakh and Renault, the JV partner Duster, an SUV is in demand. The auto manufacturers’ body is now asking Finance Minister to reconsider the tax hike on SUV while also reducing excise duty on import of parts.