Auto industry job losses may exceed 5 lakh next quarter

The slump in the auto sector would have a far reaching impact and job losses could extend to every sector across the industry.

Maruti Alto faulty
Image for reference.

The auto industry in India, which supports around 3.7 crore direct and indirect jobs is in an extended slow down mode. It is this industry that contributes over 7 percent to the country’s GDP and nearly 50 percent to the country’s manufacturing GPD.

Job losses could range between 2.30 – 3.50 lakhs across manufacturers and dealers and if this slowdown continues, over 10 lakh jobs could be lost. This slowdown will particularly impact India’s $57 billion auto component sector.

Front end jobs and jobs related to service such as painting, welding and casting could also be impacted. This slowdown, which started just ahead of the festive season in 2018, has been extended to date. Most automakers have had to resort to reduction in man-hours, layoffs, reduction in work days, etc.

Tata BS6 cars investment
Dealer inventories are at an all time high. Image for reference.

Across the auto industry companies such as Hero MotoCorp and TVS Group have resorted to a temporary halt in production. Maruti Suzuki, Mahindra and Ashok Leyland also announced production cuts while Tata Motors has halted production at the company’s Jamshedpur plant for two days on August 16th and 17th.

The company had also earlier shut production on August 1st while there were three block closures on August 8-10. Ashok Leyland has closed its facilities for 9 days over the past few months and has again announced a shut down from August 17-19. Hero MotoCorp has also closed its facilities from August 15-18.

While vehicle manufacturing units are shut down, the automobile component sector is also no different. Auto component maker Bosch has stated that it will stop production for 13 days at its plants in Tamil Nadu and Maharashtra.

Their Gangaikondan plant in Tamil Nadu will suspend production for 5 days and its Nashik plant will also resort to 8 days of no production. Component manufacturers Minda Industries has reduced inventory and operational costs and contract workers will be the first to go.

The slowdown across the auto industry is such that according to SIAM car and SUV dispatches during the April to July 2019 period dipped 21.5 percent. Truck and bus dispatches fell 13.5 percent while this stood at 13 percent in the case of two wheelers amounting to the highest drop in sales in over 20 years.

Source