Tens of thousands losing jobs as India's auto crisis deepens -sources

Wheels India

06/08/2019 17:48

* Automakers, part makers and dealers cut 350,000 jobs
-source
    * Yamaha, Valeo, others lay off 1,700 temporary workers
-sources
    * Tata Motors, Honda unit halt output for several days
-sources
    * Auto executives to meet government officials on Wednesday

    By Sudarshan Varadhan, Aditi Shah and Aftab Ahmed
    NEW DELHI, Aug 6 (Reuters) - Slumping sales of cars 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, multiple sources said.
    The cull has been so extensive that one senior industry
source told Reuters that initial estimates suggest that
automakers, parts manufacturers and dealers have laid off about
350,000 workers since April. 
    Within this previously unreported figure, car and motorcycle
makers have laid off 15,000 and component manufacturers 100,000,
with the remaining job losses at dealers, many of which have
closed, the industry source said. 
    Reuters was able to identify at least five companies that
have recently cut or plan to cut hundreds of jobs, mainly from
their temporary labour force. 
    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.
    To revive the sector, auto executives plan to demand 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, the senior industry source
said.
    The industry's plight was highlighted by the Automotive
Component Manufactures Association of India (ACMA), with the
trade body's director general, Vinnie Mehta, saying the sector
was experiencing a "recessionary phase".
    
    SPREADING MALAISE
    The malaise has been spreading across much of the industry,
both in terms of vehicle type and components as well as
geographically in India's manufacturing hubs.
    For example, Japanese motorcycle maker Yamaha Motor  7272.T 
and auto components makers including France's Valeo  VLOF.PA 
and Subros  SUBR.NS  have laid off about 1,700 temporary workers
in India after a slump in sales, sources told Reuters.
    Subros, which is part-owned by Japan's Denso Corp  6902.T 
and Suzuki Motor Corp  7269.T , has laid off 800 workers. Indian
parts maker Vee Gee Kaushiko has cut 500 people while Yamaha and
Valeo last month reduced their workforces by 200 each, said
several sources aware of the cuts. 
    Meanwhile, automotive supplier Wheels India  WHEL.NS  could
cut its temporary workforce by as much as 800 and has started
realigning its shifts, two of the sources said.
    The layoffs come as carmakers including Honda Motor Co
 7267.T , Tata Motors  TAMO.NS  and Mahindra & Mahindra
 MAHM.NS  have suspended production in recent weeks in the face
of slow demand, separate sources said.
    The auto sector, which contributes more than 7% of India's
GDP, is facing one of its worst downturns. 
    Passenger vehicle sales have dropped for nine straight
months through July, with some automakers suffering year-on-year
declines of more than 30 percent in recent months.
    Manpower is the only variable factor for companies and more
workers will face the axe, said ACMA's Mehta.
    Yamaha, Subros, Vee Gee Kaushiko and Wheels India did not
respond to requests for comment. 
    Valeo India said it is realigning for changing conditions
and has trimmed its temporary workforce.

 (Writing by Aditi Shah
Editing by Martin Howell and David Goodman)
 ((aditi.shah@tr.com; +91-11-4954 8023, +91-11-3015 8023;
Reuters Messaging: aditi.shah.thomsonreuters.com@reuters.net;
twitter: @aditishahsays))