Auto sector: 3 lakh workers lost jobs in worst decline of 2 decades

Car sales in the country plummeted by 36 per cent last month, with every category from bikes to three wheelers to commercial vehicles registering a decline. As India's auto industry faces a new nadir and no hope in sight, industry officials say this has led to three lakh people already losing their jobs, with another 10 lakh jobs on the line.

This is the ninth straight month when auto sales have registered a degrowth, as India's automobile industry goes through one of its worst phases in almost two decades. Society of Indian Automobile Manufacturers (SIAM) officials said more than three lakh casual and temporary workers have already lost their jobs due to this drop, while many auto dealerships have shut shops across the country. An estimated 10 lakh jobs are on the line if demand does not pick up or the government comes to the rescue with some bailout measures, SIAM added.

While bad news was expected at Tuesday morning's unveiling of July sales data, it still managed to shock due to the extent to which sales have fallen. Overall, the industry sold just 18 lakh vehicles last month, compared to 22 lakh in the corresponding month the previous year. 

But the devil is in the details. Car sales, always an indicator of how robust a nation's economy is, fell by 35.95 per cent, from 1.91 lakh in July 2018 to 1.22 lakh last month—a drop of about 71,000 units. Taking this financial year so far (from April 2019), the decline in car sales is 21.56 per cent.

The drop is steeper for vans (decline of 45 per cent) as well as goods carriers (decline of 41 per cent), segments crucial as they indicate a drop in economic activity. All other categories, too, showed a fall in sales, with motorcycles falling below the 10 lakh-mark for the first time in years (drop of 18.88 per cent), to scooters dropping by 12 per cent. 

The impact of this kind of degrowth would have a chain reaction that is already putting lakhs of jobs in the sector on the line—many car and bike dealers have shut shop, while auto makers from Maruti Suzuki to Mahindra have gone in for production cuts. While scooters and bike makers have cumulatively reduced production around 9 per cent, the reduction has been above 20 per cent for passenger cars.

The only area of respite, so to speak, is the export market, with some categories like medium and heavy passenger carriers (20 per cent), three-wheeler goods carriers (9 per cent) and motor cycles (12 per cent) showing some increase. Cars showed a miniscule increase in export by 42 units, a negligible increase of 0.09 per cent (from 49,338 last July to 49,380 last month).