Auto Slowdown Hits Lakhs Of Jobs, Industry Pins Hope On Diwali Season

The slowdown in auto sector has rendered an estimated 3.5 lakh people jobless due to spiralling layoffs in the automobile industry.

In Chennai's Ambattur Industrial Estate the slowdown has crippled John Peter who makes valve components. Over the last five months, his 8 lakh monthly turnover has dropped by 90 per cent, to just one lakh. With Rs 40 lakh private bank loan he has defaulted in repaying his monthly instalment of around Rs 1 lakh. He has laid off three of his 13 workers. He has reduced the three hour shift to one.

"In today's situation I'm neither able to pay salary for workers nor repay loan. It is so difficult. I don't know what to do. Banks don't listen when we say there is no business. They say they would come home and threaten us," Mr Peter told NDTV.

Chandrabose, one of his employees who used to earn Rs 18,000 a month has already suffered a third of it as there is no overtime opportunity now. The father of two school going children is now scared that the axe could fall on him soon. He says "I can live only if I have a job. Only if I have a job I can look after my family".

Not far away Andrew Ranjithkumar has decided to dump brake component manufacturing his family has been doing for 30 years. Orders from auto companies he says have fallen by 70 per cent. Unviable, now he's making parts for washing machines and home appliances. A third of his machines are also rusting for want of work.

He said "There is no demand from automobile sector. We are pushed towards home appliances as otherwise we have to lay off people. We are unable to pay salary".

This industrial hub with 2000 units employs around three lakh people. The industry has sought government intervention.

N Sujeesh, President, Ambattur Industrial Estate Manufacturers' Association added, "We need reduction in GST from 28 per cent to 18 per cent and for sub-contractors, small players from 18 per cent to 5 per cent. Lending rate is high and we need to bridge the gap between interest on savings and lending rate."

With unsold cars worth Rs 35,000 countrywide, there's an abnormal hike in dealers shutting down. The industry has estimated a loss of 3.5 lakh jobs from car manufacturers to component manufacturers.

S E Palanivel Babu, MD of True Sai Works, a car dealer based in Salem has reduced his off -take by 35 per cent. He says dealers with huge borrowings are collapsing.

He also blames it on manufacturers thrusting vehicles on dealers. He believes "In all developed countries market share is calculated on the end consumer. Only in India car market share is calculated on the basis of what manufacturers sell to dealers. This is a wrong way which leads to a wrong market share; the dealer is pressurised to hold more stocks and erosion of working capital in the longer run".

Many in the industry hope the upcoming Diwali season could shift car sales to top gear for a turnaround if the government intervenes swiftly.