–Rituparna Palit, Rizvi Saif, Shivanand S, Sayantan Guha
Chennai: The automobile sector has not shown much improvement even after giving out Diwali offers. S.Kathiravan, Maruti showroom manager at Iyappanthangal said that their sales have drastically declined when compared to last year’s Diwali season.
The automobile sector accounts for 50 per cent of India’s manufacturing GDP, and employing 37 million workers both in formal and informal sectors, according to Rajan Wadhera, President of Society of Indian Automobile Manufacturers (SIAM).
With Indian auto sales witnessing the worst decline in two decades, the economy growth rate has plunged down to 5 per cent in the last quarter.
The increase in the number of non-production days in automobile industries has also raised concern among employees. N. Prabhu, an employee of The Ford India plant in Maraimalai Nagar said, “Unlike earlier months, we now have non-production days twice a week, Thursday and Saturday.”
The Ford Motor Company has recently announced a merger with Mahindra in order to tackle the FY19-20 slump.
In Tamil Nadu around 80,000 to 1 lakh workers have lost their jobs due to the automobile slump, as reported by The Print. The state accounts for 35 per cent of India’s auto-component production and nearly 45 per cent of the country’s motor vehicle exports.
This has also impacted the business of Original Equipment Manufacturers (OEM) who have tried to cut down on production given the fall in demand.
Balakrishnan, an employee at Sundaram Clayton, Mahindra World City admitted to seeing an increase in the number of non-working days. Sundaram Clayton, a faction of the TVS group, supplies aluminum die castings to both automotive and non-automotive sector.
The recent slowdown reduced their standalone net profit by 88.66% for the second quarter of this financial year. The company has announced non-working days from October 29 to November 2, as reported by the Hindu.
However, Sathish Kumar, employee of Renault – Nissan merger in Mahindra city claimed that Renault has not been affected by the slowdown in India due to their wide global outreach. “Even as Nissan struggles with a share as low as 1 percent in Indian automobile market, our recent launch of Renault Triber has boosted up the sales of the Renault faction”, he added.
Launch of new models seems a preferable solution to fight the slump. S.Vignesh, a sales consultant at Kia showroom, Kattupakkam said, “Even as a slowdown has hit hard most of the automobile manufacturers, Kia has witnessed good sales with its new launch of Kia Seltos in the market.”
Even the fifth consecutive reduction in the repo rate, which is the bench mark interest rate set by RBI has failed to encourage people to opt for car loans. S. Senthil, a loan consultant at Yes Bank said, “Most of the banks, both private and government announced offers in car loans, especially during Diwali but it hardly showed good results.”
David. M, Branch manager of HDFC bank, Ramanujam IT Park reverberated Finance Minister Nirmala Sitharaman’s much ridiculed comment. “Millennials these days prefer OLA, Uber compared to buying cars. It might seem amusing but on a large scale this phenomenon is surely impacting the automobile industry.” He also said that the increasing job insecurity with recession seems to have deterred people from making huge investments.
Ravi Kumar, Branch Manager of Corporation Bank, Velachery echoed the same tunes. “Car-sharing apps charge a minimum of Rs. 9/km but expense with personal vehicles can go up to Rs 20/km, which is considerably costlier.”Kumar, however, acknowledged an increase in customer inflow due to the “Monsoon Offer” rolled out for car and home loans. The offer that waives off 1% GST and entire processing fee has now been extended till December 31, hoping for an upward graph in sales.