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Plight of Automobile Majors – What’s The Solution?

Saurav Bhagat by Saurav Bhagat
September 2, 2019
in New posts
4 min read
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automobile-industry-slow-growth-economic-slowdown-nextbigbrand-insource:- trak.in

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  • Demand for passenger vehicles has fallen down drastically in the last 7 months.
  • Close to 15,000 people have lost jobs in this sector in the last 3 months.
  • Automobile majors like Mahindra, Maruti Suzuki, Hyundai India and Tata Motors have their auto stocks piled up.

Rising fuel prices, liquidity crisis in non-banking financial institutions, slow growth in the employment sector and weak buyer sentiment are the major factors which led to this bad hit to the automobile industry. In the last seven months, demand for passenger vehicles have fallen down drastically, claimed a journalist who has been covering the automobile sector for many years.

Automobile Industry of India went into deep troubles in July with sales at some of the top passenger vehicle makers plunging to their worst in the last two decades. This was aided by an increase in vehicle insurance costs last year and a credit squeeze forced several consumers to defer their automobile purchases.

The country’s largest carmaker Maruti Suzuki India Ltd. has reported 37 percent domestic passenger vehicle sales from the last year earlier in July. Second-ranked Hyundai Motor India Ltd. recorded a 10 percent drop while total sales fell 16 percent at Mahindra and Mahindra Ltd. At Toyota Motor Corp. and Honda Motor Co., the sales fell 24 percent and 49 percent respectively in July. Sales of five companies which together make up about 85 percent of India’s passenger vehicle market have fallen nearly 31 percent last month from last year.

As per the stats of Society of Indian Automobile Association, close to 15,000 people have lost jobs in this sector in the last 3 months.

The automobile giants are in trouble because of the huge stocks being piled up in their godowns.

Tata Motors Registers 58 Percent Drop In Passenger Automobile Volumes

tata-motors-logo-nextbigbrand-in

Tata Motors sales decline to 23 percent in May, at the global level. The company’s sale in commercial vehicles stood at  31,490 units. Earlier the luxury brand Jaguar Land Rover (JLR) vehicles sold 1,07,343 units in May 2018 with a down to 82,374 units in May 2019, Tata Motors said in a statement.

According to reports,  Tata Motors’ JLR sale declined to 12.2% due to weak demand in China. As the consumer sentiments in China and emission regulations continued to weigh on the sales, Britain’s largest carmaker posted a dip of 13.3 percent in April and a dip of 8.2 percent in March.

In the category of the passenger vehicle, global sales stood at 50,884 units last month as against 66,354 units in May 2018, down 23 percent. Also, global wholesales of the luxury brand declined 18 percent to 39,895 units as compared to 48,786 units in May 2018. The sale of commercial vehicles stood at 31,490 units, down 23 percent from 40,989 units a year ago.

The Plight Of Mahindra’s MD Declined Automobile Sale

mahindra-logo-nextbigbrand-in

Homegrown auto major Mahindra and Mahindra(M&M) reported a 25 percent fall in total sales to 36,085 units in August. The company had sold 48,324 units in the corresponding month last year.

Managing Director of Mahindra & Mahindra (M&M), Pawan Goenka, commenting on the situation of poor auto sales leading to thousands of job, said that next fear is of suppliers and dealers going bankrupt if this continues and the upcoming festival season turns out to be slow in terms of demands.

Goenka also said that they had to let go for around 1,500 workers since April. He warns of more job cuts in the upcoming future. He also said they are not trying to remove anyone but if the slowdown continues, they will be left with no other option.

Hyundai Motor India total sales dip 9.54 percent 

hyundai-logo-nextbigbrand-in

Hyundai Motor India Ltd (HMIL) on Sunday reported a 9.54 percent decline in total sales at 56,005 units in August. The company had sold 61,912 units in the same month last year, HMIL said in a statement.

Domestic sales were down 16.58 percent to 38,205 units as against 45,801 units in August 2018, the company added.

The Solution seems Achievable:

Automakers are now counting on a positive festive season and a helping hand from the government to act as catalysts for the auto sector. The consumer buying sentiment is expected to pick up with the advent of the festive season, while OEMs are requesting the government to grant a temporary reduction in GST rates, as a short in the arm for the auto sector. The Finance Minister has recently announced a number of measures for the auto industry in a bid to revive sales in the sector.

Hope the situation comes under control soon.

Ford – the latest to cease their operations in India after a potential deal with Mahindra

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Saurav Bhagat

Saurav Bhagat

Saurav Bhagat is an experienced digital marketer and SEO Trainer from New Delhi, India. Saurav is inclined towards brands and brand story-telling from the past half a decade. His interest in startups has made him an immense member of the NBB Family from its very early days. Saurav loves Chai and writes his day to day experiences on Quora and Yuvagasm Media too. He believes in the power of storytelling for a Brand and also in general. He often says- "Stories are powerful enough to build and erase empires and generations!"

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