Automobile Crisis: 3.5 Lakh Indians Lose Their Jobs, Tata, Maruti, Honda, Mahindra Severely Impacted

3.5 lakh automobile workers have lost jobs
3.5 lakh automobile workers have lost jobs

The ongoing battle for car sales is not showing any signs of improving. We have covered many stories dedicated to the degree of car sales getting worse in the country to prove the same. Not only have auto manufacturing companies started to let their temporary workers go but also have cut their everyday work massively. Tata Motors had to face continuous shutdowns in some past months.

In fact, it has closed down for the fourth time since last month this time from Thursday to Saturday. There was production for only 15 days per month for the last two months since it has orders for only a week’s production in August. This is just scratching the surface.

Getting in-Depth

Slumping sales of cars and motorcycles are leading to cut in factory days and landing off so many people unemployed. This doesn’t paint a very positive picture of the second-time elected Modi-government. At an average, around 350,000 workers have been rendered off their jobs since April 2019, directly and indirectly related to automobile industries.

15,000 employees from car and motorcycle manufacturing cos have been laid off, while this count rises up to 100,000 employees from component manufacturing cos. The rest of the employees form up from losses at dealers. Most of these people are temporary workers.

Auto industry plans to demand for tax cuts and easier access to financing for both dealers and consumers at a meeting with officials from India’s finance ministry scheduled for Wednesday, to bring a control on this massive scary scenario that has been painting itself in the economy since some time now.

Crunching Numbers

  • Yamaha Motor and auto components makers including France’s Valeo and Subros fired about 1,700 temporary workers in India due to slump in sales.
  • Subros, owned partly by Denso Corp and Suzuki Motor Corp let go 800 workers.
  • Vee Gee Kaushiko, Indian part makers fired 500 employees
  • Yamaha and Valeo reduced their strength by 200 people each, last months.
  • Wheels India cut down its temporary workforce by 800
  • The auto sector, which contributes more than 7% of India’s GDP, is facing one of its worst downturns.
  • Passenger vehicle sales have been dropping for nine months through July, some automakers are suffering YoY declines of more than 30% in recent months.

What’s Being Feared?

The downturn – regarded by industry executives as the worst suffered by the Indian auto industry – is posing a big challenge for Prime Minister Narendra Modi’s government as it begins its second term at a time when India’s jobless numbers are climbing.

The after effect due to this slump, if not taken care of soon could result catastrophically. Why?

The automobile sector contributes 7% to the Indian GDP and employs more than 35 million people directly and indirectly, accounting for nearly half of India’s manufacturing output. In the same sector, the rate of jobless-ness has rose up to 7.51% in July 2019 from 5.66% a year earlier.

At least 7% of temporary workers employed by 15 automakers in India have lost their jobs in recent months. This is indeed something to worry about. It is not just the people who are going jobless, the companies too are making no profit and are being forced to shut down their manufacturing houses for brief periods, to match the demand of vehicles.

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