Auto Industry Slowdown Hits Lakhs Of Jobs

The slowdown in auto sector has rendered an estimated three lakh and a fifty thousand people jobless due to spiraling lay offs in the automobile industry. In Chennai's Amabattur industrial estate the slowdown has crippled John Peter makes valve components. Over the last five months, his 8 lakh monthly turnover has dropped by ninety percent, to just one lakh. With a forty lakh private bank loan he has defaulted in repaying his monthly installment of around a lakh rupees. He has laid off 3 of his 13 workers. He has reduced the three hour shift to one.

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He told NDTV "In today's situation I'm neither able to pay salary for workers nor repay loan. Its 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".

Chandrabose, one of his employees who used to earn Rs 18000 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".

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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 fell by seventy percent. 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% to 18 % and for sub contractors, small players from 18% to 5 % . Lending rate is high and we need to bridge the gap between interest on savings and lending rate".

Carmakers and industry bodies like SIAM, ACMA and FADA have been demanding to reduce the GST rates on passenger vehicles.

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With thirty five thousand crore worth of unsold cars 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 thirty five percent. He says dealers with huge borrowings are collapsing.

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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 turn around if the government swiftly intervenes.