Indian auto cos shed 3,50,000 jobs in their worst ever crash

NEW DELHI: Slumping sales of cars and motorcycles are triggering massive job cuts in the auto sector, with many companies forced to shut down factories for days and axe shifts, multiple sources said, according to Reuters website. The cull has been so extensive that one senior industry source said that initial estimates suggest that automakers, parts manufacturers and dealers have laid off about 3,50,000 workers since April.

Within this previously unreported figure, car and motorcycle makers have laid off 15,000 and component manufacturers 1,00,000, with the remaining job losses at dealers, many of which have closed, the industry source said. Reuters was able to identify at least five companies that have recently cut or plan to cut hundreds of jobs, mainly from their temporary labour force.

The downturn — regarded by industry executives as the worst suffered by the auto industry — is posing a big challenge for Prime Minister Narendra Modi's government, the Reuters report said.

Auto industry leaders on Wednesday asked the government for a stimulus package, including GST reduction on vehicles, for the sector which has been hit by an unprecedented slump in sales. In a meeting with Finance Minister Nirmala Sitharaman, industry leaders, including Maruti Suzuki Chairman R C Bhargava, M&M President (Automotive Sector) Rajan Wadhera, who is also president of SIAM, along with representatives from components sector body ACMA and dealers body FADA drew attention to the challenges, including job losses, faced by the industry.

"Yes, we have asked for certain enablers for the auto industry and they have thought on it. I am very hopeful that there will be a stimulus package (for the auto industry) coming soon," Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera told PTI.

The government wanted to understand from the industry about reasons for the slump in demand and possible solutions to the issue, he said, adding that the heavy industries ministry was supportive.

During the meeting, the auto industry broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand, he said.

Terming the meeting as "only consultative process", Finance Secretary Rajiv Kumar said, "We have heard them. We are compiling (demands from the auto industry) and we will look at it."

Speaking to reporters after the meeting, Kumar said the RBI rate cuts are very positive and "now it is for the banks to pass on these rate cuts".

Heavy Industries Minister Arvind Sawant also said the government listened to the auto sector's concerns and assured that it will look into their concerns. Wadhera said the auto industry also reiterated that the pending notification on increase in vehicle registration fees should not happen as the sector is already reeling under stress of low demand.

Besides, the government was also apprised of job losses in the sector following the market slump. Commenting on the availability and affordability of finance, Wadhera said: "Immediate measures are needed to reduce finance cost. We told them (government) that banks should be directed to pass on the repo rate cuts to the market."