Abu Dhabi, UAETuesday 17 September 2019

Tens of thousands losing jobs as India's motor crisis deepens

The motor industry, which contributes more than 7 per of India’s GDP, is facing one of its worst downturns

Workers assemble a Tata Tiago car inside the Tata Motors car plant in Sanand, on the outskirts of Ahmedabad, India, August 7, 2018. REUTERS/Amit Dave/File Photo
Workers assemble a Tata Tiago car inside the Tata Motors car plant in Sanand, on the outskirts of Ahmedabad, India, August 7, 2018. REUTERS/Amit Dave/File Photo

Slumping sales of cars and motorcycles are causing huge job cuts in India’s motor sector, with many companies forced to shut down factories for days and cancel shifts.

The cull has been so extensive that one senior industry source said initial estimates suggest that car and parts makers and dealers have laid off about 350,000 workers since April.

Of them, car and motorcycle makers have laid off 15,000 and parts manufacturers have sacked 100,000. Dealers, many of which have closed, make up the rest of the lost jobs.

At least five companies 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 Indian motor industry, is posing a big challenge for Prime Minister Narendra Modi’s government, which begins its second term with jobless numbers climbing.

To revive the sector, executives plan to demand tax cuts and easier access to financing for dealers and buyers.

They will meet officials from India’s Finance Ministry on Wednesday, the senior industry source said.

The industry’s plight was highlighted by the Automotive Component Manufacturers Association of India, whose director general, Vinnie Mehta, said the sector was experiencing a “recessionary phase”.

The trouble has been spreading across much of the industry, in terms of vehicle types and parts and in India’s manufacturing centres.

Japanese motorcycle maker Yamaha Motor and car parts makers including France’s Valeo and Subros have laid off about 1,700 temporary workers in India after a slump in sales, sources said.

Subros, which is part-owned by Japan’s Denso and Suzuki Motor, has laid off 800 workers.

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

Meanwhile, car supplier Wheels India could cut its temporary workforce by as much as 800 and has started realigning its shifts.

The layoffs come as car makers including Honda, Tata and Mahindra and Mahindra have suspended production in recent weeks with the slow demand, sources said.

The motor sector, which contributes more than 7 per cent of India’s GDP, is facing one of its worst downturns.

Passenger vehicle sales have dropped for nine straight months through July, with some car makers suffering year-on-year declines of more than 30 per cent in recent months.

Manpower is the only variable factor for companies and more workers will face the axe, Mr Mehta said.

Yamaha, Subros, Vee Gee Kaushiko and Wheels India did not respond to requests for comment.

Valeo India said it was realigning for changing conditions and had trimmed its temporary workforce.

Updated: August 6, 2019 11:22 PM

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