India’s second largest commercial vehicle maker Mahindra & Mahindra (M&M) saw a 26% fall in profit after tax (PAT) for the quarter ended June from a year ago due to decline in sales and lower margins with the overall automobile industry reeling from one of the worst slowdowns in recent years.

The company’s PAT fell to ₹918 crore from ₹1,238 crore a year ago, while its revenue fell 4% to ₹12,997 crore. The financial figures include those of Mahindra Vehicle Manufacturers, M&M’s commercial vehicle unit. However, the company’s PAT including exceptional gains such as proceeds from the sale of shares by M&M Benefit Trust and transfer of certain long-term investments stood at ₹2,260 crore.

M&M, whose June quarter sales fell 5% to 123,690 units, attributes the slide to the poor health of the industry with all its segments reporting a decline. “It is after six years, that all segments of the industry have posted a reduction in the same quarter,” the company said in a filing to exchanges.

The company said that overall sales in the industry excluding that of two-wheelers fell 15.4% driven by an 18.4% fall in sales of passenger vehicle (PV) and an 18.6% fall in sales of medium and heavy commercial vehicles. For PV sales growth, the June quarter of this financial year happens to be the worst-ever quarter since the December quarter of FY01 and the fourth consecutive quarter of de-growth.

“PV demand continues to be impacted by the slowing down of the overall economy, which along with tight credit conditions and delayed monsoon has impacted consumer sentiment in both urban and rural India. The slowing down of economic activity coupled with the increase in freight capacity of existing fleet due to implementation of new axle loading norms has resulted in many transporters either reducing or temporarily suspending their fleet purchase plans,” M&M said in a statement.

The company said that the stress in the agri sector and a credit crunch in the economy have impacted demand for pick-ups and tractors. “The HCV goods segment has posted a de-growth of 32.0%, the worst reduction in 23 quarters,” it said. Its tractor sales fell 15% from the year-ago quarter to 82,013 units. The delay in arrival of monsoon, poor spatial distribution in June, and weak agricultural incomes due to poor price realisation have dented the sentiment in the agricultural economy, said the company. This can be seen in the overall Q1 tractor sales, which fell 14.6% to 191,305 from a year ago.

Shares of M&M closed 5.62% lower at ₹518.45 on Wednesday while the benchmark Sensex ended the day 0.77% lower at 36,690.50 points.

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