Slowing demand in auto sector forces firms nearly 300 dealers to shut shop; Nissan, Hyundai worst hit

  • The total shutdowns of the dealerships in the past one-and-half years touched 271

  • Around 25 lakh people were employed directly through around 26,000 automobile showrooms operated by 15,000 dealers

  • Maruti Suzuki has decided to implement single shift system in all plants of the company including Manesar

The ongoing slump in vehicle sales has triggered massive job cuts in the country's auto sector. The crisis has forced nearly 300 dealers to pull shutters down across the country triggering jobs cuts here too.

Nissan Motor and Hyundai are reportedly the worst hit with a maximum number of retail outlets shutting down worsening the job crisis impacting the sector. Several dealers of market leaders Maruti Suzuki, Tata Motors, Mahindra and Mahindra (M&M) and Renault also closed their shops in the past 18-months, said a report in Mint.

Nissan, which plans to cut about 1,700 jobs in India, witnessed the highest number dealership shutdowns at 44 in the past 18 months while Hyundai had to close 39 retail outlets during the same period as a result of fall in demand, said the report citing Federation of Automobile Dealers Association (FADA) data.

The total number of dealers who had to shut dealerships in the past one-and-half years touched 271, of which 245 retail outlets are of passenger vehicles, said a report in ET Now News quoting FADA data.

 Slowing demand in auto sector forces firms nearly 300 dealers to shut shop; Nissan, Hyundai worst hit

Representational image. Reuters

As many as 34 dealers shut shop in Mumbai, followed by New Delhi (27), Pune (24) and Chennai (15), said the report.

Massive job loss

Around 25 lakh people were employed directly through around 26,000 automobile showrooms operated by 15,000 dealers. Another 25 lakh people are indirectly employed in the dealership ecosystem, reported PTI.

The two lakh job cuts in the last three months are over and above the 32,000 people who lost employment when 286 showrooms were closed across 271 cities in the 18-months ended April this year, the report said, quoting FADA president Ashish Harsharaj Kale.

A slump in car sales and motorcycles are triggering massive job cuts in India’s auto sector, with many companies forced to shut down factories for days and axe shifts, reported Reuters.

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

In the wake of a persistent slump in the demand for vehicles, Maruti Suzuki has reportedly decided to implement a single shift system in all its plants including Manesar in Haryana, indicating a production cut.

With the country's auto industry facing a demand slump and job loss scare mounting as a result of it, Honda Motorcycle & Scooter India (HMSI) reportedly laid off about 700 contract workers recently at its Manesar manufacturing plant due to a production cut, said a media report.

Auto sector seeks stimulus package from govt

With the crisis deepening in the auto sector, industry leaders on Wednesday asked the government for a stimulus package, including GST reduction on vehicles.

In a meeting with Finance Minister Nirmala Sitharaman, industry leaders, including Maruti Suzuki chairman R C Bhargava, M&M president — automotive sector — Rajan Wadhera, who is also president of Society of Indian Automobile Manufacturers (SIAM), along with representatives from components sector body ACMA and dealers body FADA drew attention to the challenges, including job losses, faced by the industry.

"Yes, we have asked for certain enablers for the auto industry and they have thought on it. I am very hopeful that there will be a stimulus package (for the auto industry) coming soon," said Wadhera.

During the meeting, the auto industry broadly presented factors such as issues regarding availability and affordability of financing, increasing the cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand, he said.

With PTI inputs

Updated Date: Aug 08, 2019 12:55:43 IST