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July 2019 has witnessed that lowest sales in passenger cars over the last 19 years. It also was the ninth consecutive month of declines in auto sales. According to Economic Times Auto, the slump in auto sales is not restricted to passenger vehicles and that makes it a sign of a larger economic slowdown in the country.
Two-wheeler sales dropped by over 16 per cent closing at roughly 1.5 million units. Motorcycles account for just over 60 per percent of two-wheeler sales and the rest is accounted for by scooters. The health of the rural economy of the country is judged by demand for motorcycles, and poor sales means the economy is not doing very well.
Three-wheelers witnessed a drop of 7.66 per cent in July. Three-wheelers are a major source of employment in urban markets used for ferrying people and goods. A drop in sales reflect a higher unemployment rate. The three-wheeler business is based largely on self-employment, something the government said was at peak health. This mean people have lesser capital to invest. Clearly a sign of an economic slowdown.
Sales of commercial vehicles witnessed a drop of 25.71 per cent. Within this drop, sales of medium and heavy commercial vehicles dropped by a massive 37.48 percent. Sales of light commercial vehicles dropped by 18.79 per cent.
Medium and heavy commercial vehicles are used mostly to transport industrial produce and a drop in sales reflects lower industrial production. Self-employment factors come into play with light-commercial vehicles as well.
The Domino Effect
Poor sales of vehicles also have ‘tributary' effects. The (FADA) Federation of Automobile Dealers Associations, a body representing motor vehicle dealers, said that 286 dealerships shut shop over 18 months ending April 2019.
This has affected 32,000 jobs and the crisis is still at hand. According to an Indian Express report, existing dealerships have cut jobs to keep costs in check, resulting in losses of about 200,000 direct and indirect jobs. These job cuts have taken place between May and July this year.
The Automotive Component Manufacturers Association of India, a body that represents auto parts manufacturers, has said that close to a million jobs could be lost if the situation remains that same.
Auto parts manufacturers are also concerned about the shift from internal combustion engines to electric motors, They feel this will result in more losses in terms of capital and jobs.
*all images are for representational purposes only
Thoughts About The Possibility Of More Unemployment
This is scary. We cannot afford an economic slowdown and unemployment as a nation with such a large population. If things get worse, we'll all be in a situation we don't want to be in. An economic slowdown will not effect the rich but the rest of us common folk will be on the other side of the spectrum. The governments needs to wake up and do something about it!