Addressing the media in Chennai on the actions and decisions of her ministry in 100 days of Modi 2.0, she said that the sector has been affected by several factors including introduction of BS-VI emission norms, and millennials' preference of not committing to EMIs for buying automobiles and rather preferring to use Ola or Uber or taking the metro.
Sitharaman said the government is working on a few steps for the auto industry.
"Government is conscious on the need to respond to the slowdown in the auto sector," she said.
The auto industry is a big job creating industry but with a 23 per cent drop in sales, lowest since 1997-98, it is in the grip of a severe slowdown which has evoked a lot of concern.
On Monday, industry data showed that the slowdown has dragged down the automobile industry's August sales to the lowest level since 1997-98, leading to the sector seeking even a "bigger stimulus package" to revive growth.
The demand for another stimulus arose after August's sales data showed that overall sectoral offtake in the domestic market has plunged 23.55 per cent. This level of downturn was witnessed only once earlier, in December 2000, when the de-growth was registered at 21.81 per cent. The available data series commences from 1997-98.
At present, the industry's sales have been on a downslide since the last 10 months due to a high GST rate and lack of adequate liquidity. It had recorded a slump of 18.71 per cent in July, the highest monthly sales de-growth in the last 19 years.
A million contractual manufacturing jobs are at risk due to the consumption slowdown which has forced value-chain operators across the automobile industry to reduce production levels.
On Monday, data furnished by the SIAM showed that total sales of the Indian automobile sector declined by 23.55 per cent in August to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year.
Passenger car sales in the month under consideration plunged by 41.09 per cent to 115,957 units, against 196,847 units sold in August 2018.
Utility vehicle sales declined by 2.2 per cent to 71,478, whereas vans' offtake went down by 47.36 per cent to 9,089 units against that in the same month a year ago.
Overall, passenger vehicle sales declined by 31.57 per cent in August to 196,524 units against 287,198 units in the corresponding month a year ago.
In the commercial vehicle segment, sales were down by 38.71 per cent to 51,897 units.
The sale of three-wheelers in August declined by 6.93 per cent to 58,818 units.
In the case of two-wheelers, which include scooters, motorcycles and mopeds, the sale edged lower by 22.24 per cent to 1,514,196 units.
Earlier, Sitharaman had announced several measures to rescue the auto sector including lifting ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles acquired from now till March 2020.
( With inputs from IANS )