The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers.
New Delhi: Auto industry body SIAM on Monday sought immediate steps from the government, including reduction in GST rates and initiation of scrappage policy, as sales continued to plummet with passenger vehicle makers witnessing a decline of 30 per cent offtake in August.
The Society of Indian Automobile Manufacturers (SIAM) said even the commercial vehicle and two-wheeler sales are significantly negative indicating that the market has still not responded to the various measures initiated by the Finance Minister Nirmala Sitharaman last month.
"All this while, the industry has pulled out all the stops in offering attractive deals and discounts to the consumers.
"However, the ability of the industry to provide large discounts is limited and this only highlights the need for government to consider reducing the GST rates from 28 per cent to 18 per cent which would significantly reduce the cost of vehicles and, in turn, create demand," SIAM President Rajan Wadhera said in a statement.
There is also an urgent need to come out with an integrated incentive-based scrappage policy covering all segments of the automobile industry as promised by the FM, he added.
"The festival season is around the corner, it is imperative that these decisions are taken quickly and announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry," Wadhera said.
The series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to the non-banking financial companies (NBFCs) which support the bulk of finance for the automotive industry, he added.
The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers, he added.
On Sunday, major companies such as Maruti Suzuki India, Hyundai, Mahindra & Mahindra, Tata Motors and Honda reported a high double-digit de-growth in their sales in August.
While Maruti reported a 33 per cent drop in August sales at 1,06,413 units, sale of passenger vehicles by Tata Motors fell 58 per cent during the month under review.
Similarly, Honda Cars India and Toyota Kirloskar Motor (TKM) sales dropped 51 per cent and 21 per cent, respectively.
Similarly, Mahindra & Mahindra (M&M) saw its domestic sales dip by 26 per cent to 33,564 units last month, compared to 45,373 units in August 2018.
On August 23, Sitharaman had unveiled a slew of measures to boost investor sentiment and prop up the banking and auto sectors.