HomeCar NewsLakhs of jobs may be lost in auto component industry this year

Lakhs of jobs may be lost in auto component industry this year

Automotive Component Manufacturers Association of India (ACMA) hints at job cuts if demand doesn’t grow in the coming days

COVID-19 has stretched its damage beyond the health of mankind and brought down several businesses to a standstill. Global automotive industries have faced some of the worst from the outbreak. Several automakers are still making desperate efforts to minimise further losses. As India moves halfway through its fifth phase of COVID-19 lockdown, automotive facilities (plants, showrooms and service outlets) in green and orange zones have opened following proper safety and social-distancing protocols.

OEMs have tried to make the best out of the worst by introducing online sales platforms, with limited-period benefits to get potential customers on board. Through these dedicated platforms, customers can book, opt for a test drive, make the full payment and get a vehicle delivered at their doorsteps in a safe, sanitised environment. In spite of having such convenience, sales still remain on the lower side.

As an indirect result, India’s automotive component sector is going through a rough phase as well. The substantially lower demand for new cars might result in massive job cuts in the near future. Deepak Jain, President of Automotive Component Manufacturers Association of India (ACMA), shares that there will be growing concerns on finance, job security and liquidity if matters do not attain normalcy in the months to come.

BMW India Car Production
File photo

He stated that component brands will not require a high workforce even if automakers commence operations at full potential. At present, the industry mostly utilises a temporary workforce but if the demand does not improve in the near future, the employment of regular staff could be affected too.

No major component manufacturer has reported job cuts yet though a state of poor demand and overwhelming capacities persists. COVID-19 might also cause a 35-40 per cent annual downturn as predicted by the Society of Indian Automobile Manufacturers (SIAM).

Data shows that the Indian component manufacturing industry employs around 50 lakh people, after a decline of roughly 18 per cent from the figure effective last year. The rate is projected to be between 20-40 per cent by the end of this year. Apparently, there is excess capacity and hence, there is no need to expand the workforce or resources.

Deepak Jain commented that it would be great if the Indian government could support the industry by covering a portion of the employees’ salaries or wages. This would definitely prevent chances of largescale unemployment. However, it seems the authorities in concern have neglected the automotive industry altogether.

Rushlane Google news