Auto sector slowdown puts one million contractual jobs at risk

Employees assemble parts for BharatBenz trucks inside Daimler's new factory in Oragadam in the Kancheepuram district near ChennaiBCCL

  • The drop in automobile sales will cost India nearly a million jobs.
  • The auto sector employs roughly 5 million workers in India, including 3.5 million contractual roles.
  • The auto sector saw a 17% drop in passenger vehicles sale in April.
  • Employers hire contractual staff at the time of growth while nearly 20% jobs are lost during production cuts.
Auto sales have been going down for over a year now, and it has resulted in production cuts. So much so, many dealerships have shut down too. The trickle down effect for the sector has started— as a million contractual workers are at risk of losing their jobs.

This accounts for nearly 10%-15% layoffs per company. What’s worse is that the industry pegs this number much higher, owing to its tepid sales.

The passenger vehicle sales in India saw a dip in April at 17% — the lowest in the last eight years, shows the data by Society of Indian Automobile Manufacturers (SIAM). This unprecedented decline has impacted both contractual and permanent employees.

The job loss is largely due to the slowdown in sales in Gurugram-Manesar belt of Haryana, Pune, Jamshedpur and some parts of Madhya Pradesh, according to Automotive Component Manufacturers Association of India (ACMA).

The auto sector employs roughly 5 million workers in India — including 3.5 million employed contractually.

The sector employs a high percentage of contractual workers due to vagaries in production and demand in the sector. Employers hire contractual staff at the time of growth while nearly 20% jobs are lost during production cuts, explained Vinnie Mehta, director general, ACMA.

“The industry needs urgent government intervention. There is an immediate need to stimulate vehicle demand and also sustain it post BS-VI implementation, as vehicles will become significantly expensive thereafter,” Ram Venkataramani, President, ACMA told BusinessLine.

“Whenever there is production cut of 20% by OEMs then there is job losses across the value chain of component manufacturers," he added.

The exports in the sector also dropped to 17% during the last fiscal, which accounts to roughly ₹1 trillion. The industry exports nearly 26% of its components and products.

See also:
Car sales are woefully slow in India but prices are rising due to new green norms

A global investment firm has 'SELL' rating on 70% of Indian car makers because sales may not pick up speed

A Hyderabad-based startup has raised funds to launch its electric tractors
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