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 told the Reuters news agency.
The cuts have been so extensive that one senior industry source told Reuters initial estimates suggested automakers, parts manufacturers and dealers had laid off about 350,000 workers since April.
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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 told the news agency.
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.
Auto executives demanded tax cuts and easier access to financing for both dealers and consumers at a meeting with officials from India's finance ministry on Wednesday, the senior industry source said.
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By GlobalDataThe Automotive Component Manufacturers Association of India (ACMA)'s director general, Vinnie Mehta, said the sector was experiencing a "recessionary phase".
The layoffs came as carmakers including Honda, Tata Motors and Mahindra & Mahindra have implemented brief suspensions to production in recent weeks in the face of slow demand, separate sources told Reuters.
Passenger vehicle sales dropped for nine straight months to the end of July with some automakers suffering year on year declines of more than 30% in recent months.
Manpower is the only variable factor for companies and more workers will face the axe, ACMA's Mehta tol Reuters.
The auto sector employs over 35m people directly and indirectly, accounting for nearly half of India's manufacturing output, the report said.
At least 7% of temporary workers employed by 15 automakers in India have lost their jobs in recent months, Vishnu Mathur, director general at the Society of Indian Automobile Manufacturers (SIAM), told Reuters.
Maruti Suzuki, India's biggest carmaker, cut its temporary workforce by 6% over the past six months, Reuters reported last week.
There is little sign of a revival.
