Maruti Suzuki cuts temporary jobs as sector reels under worst slowdown

Declining sales in Indian automobile market has seen its first casualty in Maruti Suzuki India, with the country's largest automaker downsizing the number of its temporary workers. As per a report by Reuters, Maruti Suzuki said it employed 18,845 temporary workers on average in the six months ended June 30, down 6 per cent or 1,181 from the same period last year. The company also said job cuts had accelerated since April when the automobile sales plunged in the country.

Maruti Suzuki Chairman R. C. Bhargava told Reuters the workforce was being reduced to reflect the slowdown in business, adding that this was one reason carmakers liked to have some temporary workers, although he did not give details about the job losses. “One of the consequences of a slowdown is that the marginal players and weaker players find it difficult to survive. When do consolidations happen in business? Only when times are difficult,” he added.

In addition, two temporary workers outside the Manesar plant in Haryana said the number of days with three shifts had been reduced, the report added. They said some assembly lines at the plant were not operating.

Maruti India would also freeze hiring new employees until the downturn reversed, two sources familiar with the matter was quoted in the report. However, the company added that it had not reduced its 15,892-strong more permanent workforce. The automaker previously said it had cut production by 10.3 per cent in the first six months of the year.

Maruti Suzuki had reported a 33.5 per cent decline in sales in July to 109,265 vehicles compared with July 2018.

The job losses add to the worsening problem of decelerating growth in automobile sector, facing one of its worst slowdowns in nearly a decade, with little sign of a swift revival. The vehicle industry accounts for nearly half of India’s manufacturing output. Maruti Suzuki, Hyundai and three other auto majors had reported a double-digit decline in sales in July as consumer sentiment remained subdued.

The passenger vehicles (PVs) sales is expected to face further pressure in the current month due to OEMs bid to maintain normal inventory levels amid weak retail sentiments, a recent note from rating agency Crisil Research pointed out. Automobile manufacturers in the country slashed production by 11 percent in April-June period this fiscal over the year-ago period due to falling sales, it said.

The job losses will also compound the unemployment problem currently faced by India. The jobless rate in Asia's third largest economy's rose to 7.51 per cent in July 2019 from 5.66 per cent a year earlier, according to private data group CMIE.