The Indian auto industry is facing the biggest slowdown in the decade. Due to various reasons, top Indian auto companies suffering great losses as there is the biggest drop in sales. As per the figures of the society of Indian automobile manufacturers, Passenger vehicle sales dropped down by 31% which is 200,790 units, Sale in commercial vehicles dropped by 25.71% which is 56,866 units and two-wheelers sales dipped down by 16.82% which is 1,511,692 units.
37 million people work in the auto industry. Due to this slowdown, around 3.5 L jobs get affected. Suffering the worst slowdown in a decade, to cut down inventory many manufacturing plants as well as vehicle dealerships are shutting down. Till now, around 300 dealerships across the country downed their shutters. Another million jobs are standing on the edge of affection in the automotive component manufacturing sector.
Top auto manufacturers in India like Suzuki, Tata Motors, Ashok Leyland, Mahindra, and Toyota have announced a pause in production.
Over 3,000 temporary employees lost their jobs in Maruti Suzuki India (MSI), the largest car manufacturer in the country. MSI chairman said that “Due to the biggest slump in Indian automotive industry the contracts of temporary employees are not renewed.” “While jobs of permanent employees were not affected,” he added.
Tata motors have stopped their production of commercial vehicles for two days. Tata’s Jamshedpur factory remains closed for the third time on 16 August. A company spokesperson said that “The external environment remains challenging, leading to demand contraction. We have aligned our production to actual demand and adjusted the number of shifts and contractual manpower,”
Ashok Leyland Company declared August 17 and 19 as a non-working day and sixth-day non-working day respectively. Earlier in a few months, the company’s production was paused for 9 days.
The not in that much profit company Nissan suffering hard from this slump. The Japanese venture Nissan has decided to shut down at least one production line.
Mahindra & Mahindra will remain closed for a fortnight in July-September. While the largest two-wheeler brand in India, Hero MotoCorp also announced the closure of its plants for four days.
Tata Motors has announced the closure for eight days, Maruti Suzuki for three days, Toyota Kirloskar for eight days and Bosch for 10 days in July – September.
Here are some factors causing this slowdown in the auto industry.
- Stricter BS6 Norms – India is to stricter its norms to make all of the vehicles run on the BS6 engine in 2020. This causing confusion in buyer’s minds to buy a car now or then.
- Stricter Policies – Due to the economic slump, banks decided to sanction automotive loans for their only customers having a higher credit score. Taxes on vehicles raised a lot causing on the road price hike of vehicles. Heavier insurance rates are becoming another reason for sale down.
- On Mobile taxi services – Many online traveling solutions like Ola and Uber made traveling easy within a city as well as outstations at comfortable prices which is making people think about using these services with drivers rather than investing much in a car.
- Traffic on roads – In many cities there are big traffic issues present. People are choosing public transport solutions like local trains and metros to avoid getting stuck in traffic. This also changing the minds of buyers to buy a car.
- Global economic crisis – Started by the trade war between the US and China, the global supply chain as well as international import-export business caught in crisis. This caused major fall down in stock markets in many economic majors including Asian countries.
In the end, we can hope for the best sales results in the auto industry in the upcoming festive season. Worlds 4th largest automotive industry is on the edge of recession; we need to see further what the government takes actions to help auto industries to raise again and save jobs of more than a million people.