11/08/2019
PUNE:
With
the automobile industry slipping into a gorge with no visible sign of revival
in the near future, Tata Motors, India’s top automaker by revenue, and Mahindra
and Mahindra (M&M), the country’s largest utility vehicle maker, have
decided to cut production at some of their plants.
Maruti Suzuki, India’s biggest car maker, is also
likely to cut down production and operate just one shift at all its factories,
with demand for car slumping to a decade low and causing inventory to bloat. Other
automakers are likely to follow suit, which would lead to loss of at least
contractual jobs.
Tata Motors, which had previously flagged a
challenging external environment, said it closed some blocks at its Pune plant
in Maharashtra. Last month the Mumbai-headquartered company, which owns British
luxury car brand Jaguar Land Rover, had posted a bigger-than-expected quarterly
loss due to weak conditions at home and problems at its British luxury car
unit.
M&M said its automotive segment, which makes
passenger and commercial vehicles and spare parts, would cut production for
8-14 days at various plants during the second quarter. Maruti Suzuki, which
sells one out of two cars bought in the country, will slash one shift at its
Manesar factory, industry sources said, adding that the company’s Gurugram and
Gujarat plants were already operating below their capacity.
The unprecedented sales slump across auto industry
from two-three-four wheeler segment has triggered massive job cuts. While the
Federation of Automobile Dealers Association, or FADA, said about 200,000 jobs
were lost in the June quarter across auto dealership, an additional 150,000
jobs were lost among the auto components manufacturers in the country.
“The 200,000 job cuts in the June quarter are over
and above the 32,000 people who lost employment when 286 showrooms were closed
across 271 cities in the 18-months period ended April this year,” said FADA
President Ashish Kale. He said job cuts may continue with closure of more
showrooms across the country as slowdown has impacted all auto brands,
including luxury brands. Kale said government must intervene with a slew of
incentives to arrest this livelihood threatening trend.
Industry experts said due to the high capital cost
of selling vehicles along with rising inventory, hundreds of dealerships went
out of business, laying off jobs. The crisis has also hit smaller auto parts
makers like Jamna Auto Industries. The company, whose customers include Tata
Motors, General Motors Co and Toyota Motor Corp, said it might shut all its
nine plants this month over weak demand.
“In view of the weak customer schedule and high
inventory, the company has made changes in production schedule at all its
plants. The plants may not run or partially run on all working days in August,”
Jamna Auto said. Auto components manufacturers Bosch and Wabco India have
already trimmed production amid the demand slump.
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