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3,50,000 lay-offs since April: Worst downturn ever for Indian auto industry

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.

India TV Business Desk Edited by: India TV Business Desk
New Delhi Published on: August 07, 2019 19:24 IST
The fallout from the auto slump could be huge. The sector

The fallout from the auto slump could be huge. The sector employs more than 3.5 crore people directly and indirectly, accounting for nearly half of manufacturing output.

India's auto sector has, of late, been facing massive job cuts due to slumping sales of cars and motorcycles.

A Reuters report has, hence, claimed that many companies were forced to shut down factories for days and axe shifts. The cull has been so extensive that one senior industry source told Reuters 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 told Reuters.

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 malaise has been spreading across much of the industry, both in terms of vehicle type and components as well as geographically in country's manufacturing hubs. 

The Reuters report quotes the example of Japanese motorcycle maker Yamaha Motor and auto components makers including France's Valeo and Subros that have laid off about 1,700 temporary workers in India after a slump in sales.

Domestic parts maker Vee Gee Kaushiko has cut 500 people while Yamaha and Valeo last month reduced their workforces by 200 each.

The fallout from the auto slump could be huge. The sector employs more than 3.5 crore people directly and indirectly, accounting for nearly half of manufacturing output.

Jobless rate rose to 7.51 per cent in July 2019 from 5.66 per cent a year earlier, according to private data group CMIE.

(with inputs from Reuters)

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