Domestic car sales were down 33.4 per cent to 1,31,281 units last month as against 1,97,124 units.
At present, 60 per cent of auto components are taxed at 18 per cent.
Sales of commercial vehicles were down 38.71 per cent to 51,897 units in August.
The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers.
BS-IV vehicles purchased up to March 2020 will remain operational for entire period of registration, FM Nirmala Sitharaman said.
PV production in the April-July period stood at 12,13,281 units as against 13,97,404 units in same period last fiscal.
Domestic PV sales also saw the biggest fall in nearly 19 years, slumping by 30.98 pc to 2,00,790 units.
In fact, all vehicle categories witnessed decline in sales during the month.
As many as 3.50 lakh jobs have reportedly been lost in the auto industry since the start of the fiscal.
In a meeting with Finance Minister, industry representatives drew attention to challenges faced by the auto industry.