Explained: Car sales down, what does this mean for the economy?

Not just cars, sales of trucks, tractors and motorcycles too are down. The NBFC crisis has caused a liquidity crunch, and customers are postponing the decision to buy. What does this mean for the economy?

The sharp decline in sales numbers of the leading manufacturer shows the decline in consumer sentiment and indicates an overall slowdown in the economy. (Express photo)

Leading automobile manufacturers announced a sharp decline of up to 50 per cent in their domestic sales in July with the market leader Maruti Suzuki reporting a 36.2 per cent drop in sales during the month. Hit by the liquidity crunch for non-banking financial companies (NBFCs) and a dip in consumer sentiment, July became the twelfth out of the last 13 months in which the auto sector has seen a decline in domestic sales.