Unprecedented Crisis In Automobile Sector: 10 Lakh Indians Face Job Loss As Car Sales Decline
2019 is turning out to be the worst year for the automobile industry ever. As per estimates, and trade unions, more than 10 lakh Indians are facing a job loss, as car sales have hit rock bottom, and factories are shutting down.
How will the industry revive itself?
As per numbers released by Automotive Component Manufacturers Association of India (ACMA), 8 lakh to 10 lakh Indians can lose their jobs in the coming months, as automobile sector’s growth has slowed down in the last 11 months.
Layoffs have already started in some companies, and in the coming months, more and more employees will have to face reality.
As per ACMA Director General Vinnie Mehta, most of the layoffs will happen for contractual employees, whose numbers are close to 35 lakh out of 50 lakh employees which automobile companies and component manufacturers have.
He said that major hubs of automobile manufacturing such as Gurugram-Manesar belt of Haryana, Pune, Jamshedpur (Jharkhand) and some parts of Pithampur (Madhya Pradesh) are facing slowdown, and there will be ripple effect of job loss everywhere, soon.
Industry Needs Govt. Help Now
ACMA Director stated that this crisis in the automobile sector in ‘unprecedented’, as several companies such as Maruti, Tata, Honda, Ashok Leyland and others have temporarily shut down their factories, which has never happened before.
In this situation, Govt. help is needed.
Ram Venkataramani, President, ACMA said, “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,”
The association has also demanded slashing of GST, as the components are taxed under 18%, which is hugely impacting the bottom-line.
We have already reported that Rs 35,000 crore worth of cars are lying unsold in India, even as major automobile companies have already locked down their factories due to slow sales, and declining revenues.
Last month we reported that country’s biggest car manufacturer: Maruti Suzuki has cut down on production for 4-months in a row, and their output is down by 18%.
Govt. push for electric vehicles, and implementing strict anti-pollution laws and regulations such as BS-VI, along with Uber/Ola’s impact on the transportation sector is also seen as major factors for the slow down in the industry.
We will keep you updated, as we receive more updates.