Slowdown: Car sales fall, 1.5 lakh to lose jobs

Car sales in India fell for the second consecutive fiscal in 2013-14 with a drop of 4.65 per cent as the auto industry continued to struggle with demand slump due to a sluggish economy that has led to an estimated job loss of around 1.5 lakh across the entire value chain.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in FY14 stood at 17,86,899 units as compared to 18,74,055 units in the previous fiscal.

In the 2012-13, car sales in India fell by 6.69 per cent, which was the first decline in a decade.

"Last year was one of the most difficult years for the industry. The business environment was tough due to low growth of economy, high interest rates, fuel prices and low sentiments," SIAM President Vikram Kirloskar said.

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He said the decline in auto sales hit the industry hard and employment, mainly of contract and temporary workers, have been affected.

"We at SIAM have not done a calculation of how much job losses were there, but I personally feel that across the entire value chain in the auto industry, from raw materials to dealerships, there could be around 1-1.5 lakh job losses," Kirloskar said.

During the fiscal, total sales of vehicles across categories, however, were up 3.53 per cent in 2013-14 at 1,84,21,538 units as compared to 1,77,93,701 units in 2012-13, SIAM said.

Two-wheelers did well posting a growth of 7.31 per cent at 1,48,05,481 units as against 1,37,97,185 units in FY13.

Motorcycle sales in 2013-14 stood at 10,479,817 units as against 1,00,85,000 units in the previous year, up 3.91 per cent, SIAM said.

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Scooters also posted a robust growth of 23.24 per cent during FY14 at 36,02,744 units as compared to 29,23,424 units in 2012-13.

Commercial vehicles, however, continued to reel under a prolonged slump, posting a decline of 20.23 per cent at 6,32,738 units as against 7,93,211 units in the earlier fiscal.

"The stalling of infrastructure development projects, ban in mining activities and overall slowdown in economy continued to hit the commercial vehicles segment," Kirloskar said.

On the outlook for FY15, Kirloskar said the industry was "hoping for a moderate growth or at least not to be in the negative territory".

When asked about the expectations of the auto industry from the new government post elections, Kirloskar said: "We hope the excise duty cut will remain. In fact, there is room for further reduction in taxes as auto industry is one of the most taxed sectors."

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A growth-oriented policy that will spur manufacturing activities and overall economy to lift consumer sentiments will be crucial, he added.

On the export front, during 2013-14, car shipments were almost flat at 5,50,466 units as against 5,47,222 in the previous fiscal.

Overall auto exports from India grew by 7.21 per cent in FY14 at 31,07,893 units compared to 28,98,907 units in 2012-13.

SIAM said domestic passenger car sales declined 5.08 per cent to 1,71,489 units in March as compared to 1,80,675 units in the year-ago month.

Motorcycle sales last month climbed 16.24 per cent to 9,06,665 units from 7,80,022 units a year earlier.

Total two-wheeler sales in March rose 21.16 per cent to 13,34,214 units as against 11,01,203 units in the same month last year.

Sales of commercial vehicles were down 24.55 per cent to 64,101 units in March, SIAM said.

Vehicle sales across categories registered an increase of 12.83 per cent to 16,77,445 units from 14,86,664 units in March 2013, it added.