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Explained: Old reasons and new red flags in continuing auto slowdown -Yashee Singh

-The Indian Express

In the commercial vehicles section, sales of Tata Motors, the largest commercial vehicle maker, fell by almost half as against August 2018. Mahindra & Mahindra (M&M), the second-largest manufacturer, posted a 28 per cent decline.

The slowdown in the auto sector has worsened, with leading car manufacturers posting up to a 50 per cent drop in sales for August 2019 as against the corresponding month last year. Sales are down across segments — passenger vehicles, commercial vehicles, and two-wheelers.

Maruti Suzuki (MSIL) — the market leader with around 50 per cent market share — announced a 36 per cent drop in domestic passenger vehicle sales for August, the lowest monthly sales in almost five years. Honda Cars posted a massive 51 per cent fall, while Tata Motors passenger vehicle division fared worse with a 58 per cent decline in sales.

In the commercial vehicles section, sales of Tata Motors, the largest commercial vehicle maker, fell by almost half as against August 2018. Mahindra & Mahindra (M&M), the second-largest manufacturer, posted a 28 per cent decline. In the two-wheelers category, Hero MotoCop, the world’s largest two-wheeler manufacturer, registered a 20 per cent decline, while Bajaj Auto saw a decline of 13 per cent.

Why the reverse gear

The slowdown in the auto industry is due to a number of factors, such as the liquidity crunch due to continued stress on NBFCs (Non-Banking Financial Companies), the wait for the festive season, the change in axle load norms for trucks, and hopes of a GST cut.

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