A total of 240,000 passengers vehicles, SUVs and vans were sold during the month, compared to 300,000 units sold in May 2018. This is described as the "sharpest decline" in the past 18 years after 2001 when car sales had witnessed a decline of 22 percent.
The slowdown was witnessed in both the urban and rural markets, said the industry insiders.
According to the SIAM data, this was the seventh straight month when car sales witnessed a decline in the country. In April, car and SUV sales had dipped by 17 percent.
Main reasons are loss of jobs and tight liquidity. The introduction of cab aggregators like Ola and Uber, rising congestion on roads, and improving public transport services like Metro trains also contributed to a decrease in passenger vehicles' sales.
Industry insiders said that the government needs to cut taxes to revive the customers' sentiment towards buying cars/SUVs. "Buyers need affordability. The situation is very serious," SIAM Director-General Vishnu Mathur was quoted as saying on Wednesday.
The government needs to bring down Goods and Services Tax (GST) for the auto industry from 28 percent to 18 percent, Mathur said.
Vikas Jain, the head of sales at Hyundai India, said "We have never seen such a prolonged spell of negatives. It is tough. Markets cab de-grow sometimes, but this was unexpected. We didn't prepare for this."