Automobile Industry in a turmoil – over two lakh jobs cut in dealerships

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automobile industry losses

It has been a rough few months for the automobile industry with even factories closing down for days. We have also covered in a previous article that the major automakers have a huge number of unsold inventory lying in stockyards and with dealers. The dealers are now taking the next step to cover the losses of the sales disaster – cutting jobs. The industry has lost two lakh jobs in just over three months.

Federation of Automobile Dealers Associations (FADA) believes the job cuts may continue seeing no recovery soon. They also added that more showrooms will close their shutters if the situation does not get back on its feet. “The majority of job cuts have happened in the last three months…It started around May and continued through June and July,” FADA President Ashish Harsharaj Kale told PTI.

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He further said, “Right now most of the cuts which have happened are in front-end sales jobs but if this (slowdown) continues, then even the technical jobs will be affected because if we are selling less then we will also service less, so it is a cycle.” He also added,  “The way the first quarter has panned out despite good election results and the Budget, the degrowth continued. It is clear now that a proper slowdown has hit us. Now dealers have resorted to cutting manpower.”

What happened?

Passenger vehicles segment of the automobile industry experiences the worst of the calamity. All major manufacturers are reporting sale drops in the previous month of July 2019. Honda reported a massive drop of 48.67% followed by Maruti Suzuki at 36.3% and Tata Motors with a 31% loss. Other companies like Hyundai reported a 10% drop whereas Mahindra&Mahindra saw a 16% dip.

The reason? Many factors play in this crisis. Skyrocketing fuel prices, slow job growth and even a liquidity crisis in the non-banking financial companies are some of the reasons.



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Amith Gowda

Amith Gowda

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