Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It’s the ninth straight month of declines and the sharpest one-month drop in more than 18 years, SIAM Director General Vishnu Mathur told CNN Business.
“This is a very deep sort of a slump that is impacting every segment of the industry,” Mathur said.
India had been a bright spot for carmakers until recently, with annual sales of passenger vehicles rising by about 33% over the past five years.
Before the slump hit, India was predicted to overtake Germany and Japan to become the world’s third largest car market by 2020 — behind only China and the United States.
But the country’s biggest carmakers are now struggling. New safety and emission regulations have driven up prices, troubles among India’s consumer finance providers have hit lending and a broader economic slowdown has made consumers reluctant to spend.
Thousands of jobs lost
The slump has prompted companies to slash over 330,000 jobs through the closing of car dealerships and cutbacks at component manufacturers, Mathur said, citing data from industry associations that govern those two sectors.
The Automotive Component Manufacturers Association of India warned in a statement last month that its “crisis-like situation” could result in a million people being laid off.
Carmakers in India have directly axed at least 15,000 temporary workers, according to Mathur.
“The industry has stopped all fresh recruitments,” he added.
Auto industry representatives are calling on the government to help bail out the sector as it has done in the past, Mathur said. They’re asking for tax cuts and other steps to get the market moving again.