Auto Industry in Poor Phase, Sales Declined, Here’s Why

Sales of passenger vehicles for the ninth consecutive month declined in July. Last month sales fell by about 30 percent. Let us tell you the reason for this dilemma.
Auto Industry in Poor Phase, Sales Declined, Here’s Why

For the last one year, the condition of the Indian auto industry is bad and the situation is getting worse every day. Sales of passenger vehicles for the ninth consecutive month declined in July. Sales declined by about 30 per cent last month, while Maruti Suzuki's sales fell by 36 per cent, Honda Cars' sales dropped by 49 per cent. Let's know what is the reason for this dilemma.

For the first time since June 2017, Maruti has sold less than one lakh in a month. It is not that the condition of other companies is somewhat better, the sales of Hyundai Motor India, Mahindra & Mahindra have also dropped significantly, while they have launched several models in the last one year. Hyundai's sales declined 10 percent and Mahindra's sales declined by 15 percent. Sales of Honda Cars fell by 49% and Toyota's sales declined by 24%. In July, domestic sales of Maruti Suzuki dropped 36.30 percent to 98,210 units compared to 1,54,150 vehicles in the previous year.

Lethargic Economy 

There is a decline in the economy, a recession and people's earnings, salaries are not going to rise further. Because of this, sales of the auto sector are not able to move. Due to the budget of the house, many people are avoiding the purchase of cars.

Cash Crisis

Apart from this, the cost of insurance increased significantly, tax increases and non-banking financial companies have been adversely affected by the sale of cars, commercial vehicles due to the cash crisis. NBFCs have had difficulties in getting auto loan due to cash crisis.

Rural demand does not increase

In many areas of the country, due to delayed monsoon rain or low rainfall, rural economy is not able to accelerate too, and due to this, the demand for vehicles is not increasing in rural areas too.

Organized Market of Old Vehicles

In the last few years, many organized players have landed in the sale of old vehicles, from this old market of pre-owned vehicles has increased rapidly. This has also affected sales of new cars. With the increase in the cost of vehicles, many people are now opting to buy old vehicles.

There is not much room for improvement in the auto industry over the coming months. Due to adoption of the BS-6 standard from April 2020, the cost of auto companies will increase due to the cost of the auto companies and due to which the auto companies will remain difficult for at least the end of next year.

Due to the merchandising of dealers, most companies have cut the production of cars in June. The cost of auto companies is increasing due to the emissions, insurance and safety standards, which may increase the prices of vehicles by 13 to 30 percent in the next one year.

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