The longest period of slump in India’s automobile market, with sales declining for a second straight year, has taken its toll with production cuts leading to the loss of 200,000 jobs, according to the Society of Indian Automobile Manufacturers.
“Last year was one of the most difficult periods for the auto industry,” said Vikram Kirloskar, the president of SIAM, who is also the vice-chairman of Bangalore-based automaker Toyota Kirloskar Motors. “I personally feel that across the entire value chain in the auto industry, right from raw materials to the dealerships, there could be around 1.5-2 lakh job losses.”
The Indian auto industry employs 19 million direct and indirect workers.
The industry is already falling behind its target on the job front as it was estimated to employ more than 25 million workers by 2016 under the 10-year Auto Mission Plan of the government.
A consistent fall in demand and sales for the past two years is likely to create a huge employment gap.
Car sales in India fell for the second consecutive fiscal ended March 2014 with a 4.65% drop as the auto industry continued to struggle in a sluggish economy. Besides the decade’s steepest decline in car sales, heavy trucks and buses continued its negative sales streak for the past 25 months.
The industry is not expecting an immediate turnaround, even with a cut in excise duty. According to industry sources, the biggest job losses would have occurred at the retail levels, mainly dealerships that sell all class of vehicles — from bikes to trucks. It also hit the component manufacturers hard.
Many auto companies have gone for downsizing. India’s largest auto company by revenues, Tata Motors, had undertaken an Early Separation Scheme last year to reduce manpower by as much as 5,000 workers across its plants at Jamshedpur, Pune and Lucknow.
More than 500 managers had left the Chennai-based Ashok Leyland as part of its voluntary retirement scheme in November 2013. Due to declining sales for the past two years, companies are enforcing regular production cuts and industry executives said that job losses in the sector are quite common.
Market leader Maruti Suzuki had closed its five plants for eight days in June last year to reduce its swelling inventory at factory and dealers, while others like Mahindra & Mahindra, General Motors, Skoda Auto also undertook plant shutdowns and retrenched their casual and temporary workers to align production with the slowing market conditions.
In a major setback to the passenger car segment Hoover India, which was a master franchise of Japanese carmaker Nissan, shut its office leaving hundreds of its employees jobless. Analysts tracking the sector said that the trucks and buses segment was the hardest hit.
Source: The Economics Times
“Last year was one of the most difficult periods for the auto industry,” said Vikram Kirloskar, the president of SIAM, who is also the vice-chairman of Bangalore-based automaker Toyota Kirloskar Motors. “I personally feel that across the entire value chain in the auto industry, right from raw materials to the dealerships, there could be around 1.5-2 lakh job losses.”
The Indian auto industry employs 19 million direct and indirect workers.
The industry is already falling behind its target on the job front as it was estimated to employ more than 25 million workers by 2016 under the 10-year Auto Mission Plan of the government.
A consistent fall in demand and sales for the past two years is likely to create a huge employment gap.
Car sales in India fell for the second consecutive fiscal ended March 2014 with a 4.65% drop as the auto industry continued to struggle in a sluggish economy. Besides the decade’s steepest decline in car sales, heavy trucks and buses continued its negative sales streak for the past 25 months.
The industry is not expecting an immediate turnaround, even with a cut in excise duty. According to industry sources, the biggest job losses would have occurred at the retail levels, mainly dealerships that sell all class of vehicles — from bikes to trucks. It also hit the component manufacturers hard.
Many auto companies have gone for downsizing. India’s largest auto company by revenues, Tata Motors, had undertaken an Early Separation Scheme last year to reduce manpower by as much as 5,000 workers across its plants at Jamshedpur, Pune and Lucknow.
More than 500 managers had left the Chennai-based Ashok Leyland as part of its voluntary retirement scheme in November 2013. Due to declining sales for the past two years, companies are enforcing regular production cuts and industry executives said that job losses in the sector are quite common.
Market leader Maruti Suzuki had closed its five plants for eight days in June last year to reduce its swelling inventory at factory and dealers, while others like Mahindra & Mahindra, General Motors, Skoda Auto also undertook plant shutdowns and retrenched their casual and temporary workers to align production with the slowing market conditions.
In a major setback to the passenger car segment Hoover India, which was a master franchise of Japanese carmaker Nissan, shut its office leaving hundreds of its employees jobless. Analysts tracking the sector said that the trucks and buses segment was the hardest hit.
Source: The Economics Times
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