(CNN) - Just two years ago, India's huge car market was booming and global players were rushing to invest. Now it's been slammed into reverse.
Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It's the ninth straight month of declines and the sharpest one-month drop in more than 18 years, SIAM Director General Vishnu Mathur told CNN Business.
"This is a very deep sort of a slump that is impacting every segment of the industry," Mathur said.
India had been a bright spot for carmakers until recently, with annual sales of passenger vehicles rising by about 33% over the past five years.
Big global players like Hyundai and its subsidiary Kia have invested billions to expand their footprint in the country, and new players like Chinese state-run carmaker SAIC have also tried to grab a slice of business.
Before the slump hit, India was predicted to overtake Germany and Japan to become the world's third largest car market by 2020 — behind only China and the United States.
But the country's biggest carmakers are now struggling. New safety and emission regulations have driven up prices, troubles among India's consumer finance providers have hit lending and a broader economic slowdown has made consumers reluctant to spend.
Maruti Suzuki, which accounts for roughly half the passenger cars sold in India, reported a 36.7% drop in vehicle sales in July. Sales at Tata Motors, which owns Britain's biggest carmaker Jaguar Land Rover, plunged 31%.
Mahindra & Mahindra, the leading Indian manufacturer of electric vehicles, suffered a 17% slump. It said last week that it would have "no production days" at several plants for up to 14 days this quarter to manage falling sales.
Global rivals are also suffering. South Korea's Hyundai, the No.2 player in India, saw its sales fall 10% in July compared to the same month last year, while Japanese giant Toyota fell 24%.
Thousands of jobs lost
The slump has prompted companies to slash over 330,000 jobs through the closing of car dealerships and cutbacks at component manufacturers, Mathur said, citing data from industry associations that govern those two sectors.
The Automotive Component Manufacturers Association of India warned in a statement last month that its "crisis-like situation" could result in a million people being laid off.
Carmakers in India have directly axed at least 15,000 temporary workers, according to Mathur.
"The industry has stopped all fresh recruitments," he added.
That's bad news for Indian Prime Minister Narendra Modi, who won re-election by a landslide in May but is currently presiding over India's slowest economic growth in five years and its highest unemployment rate in several decades.
Auto industry representatives are calling on the government to help bail out the sector as it has done in the past, Mathur said. They're asking for tax cuts and other steps to get the market moving again.
India is one of several big car markets to face a major slump, as the global car industry struggles with trade tensions, an economic slowdown, new technologies and regulatory changes. The world's biggest car market, China, shrank for the first time in more than two decades in 2018.
Germany, home to some of the world's top carmakers like Volkswagen, BMW and Mercedes-Benz owner Daimler, is still grappling with the effects of a diesel emissions scandal and the prospect of a messy Brexit.
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