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Breakdown in auto sector, thousands of jobs at risk

Hyundai V-P says his firm may also retrench people if situation deteriorates; govts urged to phase out diesel vehicles over 10 yrs old, petrol vehicles over 15 yrs old

Published: 15th August 2019 06:28 AM  |   Last Updated: 15th August 2019 06:28 AM   |  A+A-

File photo of assembly line of a truck manufacturing unit in Chennai

Express News Service

CHENNAI: The automobile sector in the country is facing a severe crisis, with sales dipping for the ninth straight month to a two decade low. Chennai, which has a total installed capacity to produce 1.3 million cars and 3.6 lakh commercial vehicles per year, is among the hardest hit cities. 

Auto majors and component manufacturers are cutting production by double digits, and some are in the process of retrenching their contract employees. There are no figures to show what the damage is in Chennai, but the Society of Indian Automobile Manufacturers (SIAM) deputy director-general, Sugata Sen says, across India 286 dealers have shut shop and around 2.3 lakh workers lost jobs.

Every minute, three cars would be made in Chennai, and every 75 seconds a commercial vehicle would be made, said the State government while unveiling its ‘Vision 2023’. That target now seems unachievable, as the sector is seeking government intervention to boost demand and sales. Many Chennai-based automobile majors Ashok Leyland, TVS Motors, and Hyundai face a crunch, says Sugata Sen. When Express contacted Ashok Leyland and TVS Motor officials, they refused to comment.

Jobs Axed

Centre of Indian Trade Unions (CITU) Tamil Nadu chapter president A Soundarrajan told Express that most auto majors and auto component manufacturers have retrenched trainees and contract employees. Around 4,000 to 5,000 workers have been retrenched. Many original equipment manufacturers (OEMs) have resorted to working four to five days a week as there are no orders. “The situation may be grim if the economy does not revive,” says Soundarrajan.

B C Datta, Vice-President of Hyundai, says his firm may also retrench people if the situation deteriorates. “Right now, there are no job cuts in Hyundai. If the situation worsens, we may think of retrenching contract workers,” he says. However, there has been massive retrenchment among our vendors who make auto components for the company, he says. “Since production is down by 10 per cent, it is affecting auto component manufacturers,” says Datta.

Interestingly, auto-makers have approached the State and Central governments for concessions. Datta says that automakers are seeking reduction in Goods and Services Tax from 28 per cent to 18 per cent. “If the government does not want to give it for luxury segment, they can reduce for cars priced less than `10 lakh as 70 per cent sales happens in this segment,” he says.

He also said that among other demands is phasing out of diesel vehicles which are more than 10 years old and petrol vehicles that are 15 years old. “We have put forth this demand as it will reduce pollution and consumption of petrol and diesel by these BS-II vehicles.

It is learnt that automobile industry has represented to the State government to reduce the registration cess. 

“For every vehicle above `10 lakh, one has to pay registration charge of 15 per cent and it keeps coming down for vehicles less than `10 lakh. We wanted the slab to be cut by around five per cent,” says an official of a car manufacturing company. But Sugata Sen says the sector could pick up only if the economy revives.

Firms like Ford, Daimler, Nissan, Yamaha, Royal Enfield, Renault, Hyundai, BMW and several others have set up facilities in Chennai and Orgadam to tap the emerging Asian markets. Chennai Port Chairman Ravindran says that car exports have grown when compared with previous year. “Last year, the port exported 39,600 vehicles and this year, we had exported 57,500 vehicles,” he says. “However, at Kamarajar Port there has been neither growth nor dip in car exports.”

More from Chennai.

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