Old Government Vehicles to be Replaced With New Cars, Maruti Suzuki Among Top Gainers

The Indian automotive sector has been going through one of its worst slowdowns in history manufacturers across segments, including cars, motorcycles and scooters, reporting a steep decline in sales when compared to Year-on-Year sales. As a result, the entire Passenger Vehicle and Commercial Vehicle industry have seen a decline in sales with inventory piling up with dealers across the country. To give you a perspective, as per the numbers, the slowdown has been the worst in the last 19 years which has resulted in over 15,000 job losses in the past three months alone. There have also been reports that automakers, parts manufacturers and dealers have laid off over 3.5 lakh workers since April 2019.

However, in a bid to restore some confidence into the ailing automotive industry, Finance Minister Nirmala Sitharaman today announced several measures. One of which was the decision to lift the ban on the government departments from buying new vehicles. This was done in a bid to get the ball rolling again. This will result in some movement in the stocked-up inventory and get the sales counter ticking for both the automakers and component manufacturers.

However, it is important to note that a majority of vehicles used by the government are made by Maruti Suzuki which is India’s biggest automaker and has been one of the worst-hit by this slowdown. The company has been cutting down on production month after month with the recent one being to the tune of 25 per cent in July, which was the sixth cut down in a row. The Indian automaker also reported a 36 per cent decline in sales for the month of July which was the highest fall registered by the company in two decades.

Maruti Suzuki chairman R C Bhargava has welcomed the steps taken by the government, saying the industry is encouraged by the positive response from the finance ministry. He also added that it’s not important as to how many cars government buys from Maruti Suzuki but this change in attitude will have a positive impact on the buyers’ sentiment.

As per the data that was recently released by the Society of Indian Automobile Manufacturers (SIAM), vehicle sales across categories, including passenger vehicles (PVs) and two-wheelers, stood at 18,25,148 units last month as against 22,45,223 units in July 2018. The previous biggest decline across overall domestic automobile sales was recorded in December 2000 when it fell 21.81 per cent.