2019-08-11_Business_Today

68 I BUSINESS TODAY I August 11 I 2019

CORPORATE > AUTO

or the past 26 years, K. Munisamy,
50, has been following a routine.
Every morning, in a blue shirt and
trousers, he starts work at one of the
milling units of an auto parts maker
in Chennai. He clocks in eight hours
before going home. “During good
times, I used to work over time and
earn more,” says the father of two,
who supports a six-member family,
which includes his parents. “I used
to earn enough (22,000 a month) to meet the expenses, but that will change,” he says. His colleague, Ku- mar, 35, is in a similar situation. “My children are in school and my wife doesn’t have a job. I am the only earning member in my family (he earns about17,000 a month) and I
have to search for a job now,” he says.
“This is a bolt from the blue.”
Kumar and Munisamy are early
casualties of the ongoing slump in
India’s automobile sector. Their
employer, a valve maker in Chen-
nai’s Ambattur Industrial Estate,
has given notice to its employees as
it is shutting operations a couple of
months down the line.
India’s auto industry is witnessing
one of the worst rides in its history.
They are staring at an unsold inven-
tory of 500,000 passenger vehicles
and 3 million two-wheelers. India’s
top 10 auto companies have slowed
production. According to industry
body SIAM, vehicle sales across all
categories declined 12.35 per cent in
the April-June period. Passenger ve-
hicle sales fell 18 per cent and car sales
declined 25 per cent in June alone.
The industry is going through a pro-
longed slowdown, the worst in nearly
two decades, says SIAM President
Rajan Wadhera.
The crisis has hit almost all auto-
mobile production hubs in the coun-

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try, and companies are resorting to

drastic measures to stay af loat. At

least seven out of the top 10 passen-

ger vehicle makers, including Maruti

Suzuki India, Tata Motors, Mahindra

& Mahindra and Honda Cars India,

had production shutdowns in May

and June. SIAM data shows that the

passenger vehicle production during

June stood at 267,600 units, the low-

est in 71 months.

The country’s largest car maker

Maruti Suzuki cut production for

the fifth consecutive month in June,

according to a regulatory filing. It

slashed total vehicle production by

15.6 per cent last month to 1,11,917

units compared to 1,32,616 units in

the year-ago month while the mini

segment vehicles, including mod-

els such as Alto, by 48.2 per cent to

15,087 units last month as against

29,131 units in the year-ago period.

Tata Motors, too, reportedly, has cut

by nearly 50 per cent production of its

hatchback Tiago and compact sedan

Tigor since May.

“We don’t see any green shoots

coming up for the rest of the year,”

says Aswin Kumar, Associate Direc-

tor, Mobility Practice, at consultancy

firm Frost and Sullivan. “The slow-

Source: SIAM

Consumer sentiment :

Car and two-wheeler sales

depend on propensity

of consumers to spend,

which has been low over

the last 12 months due to

stagnant job market and

low income growth

Liquidity crunch : Bank-

ing and NBFC crisis has

affected cost and avail-

ability of capital for both

consumers and dealers

Increased prices : A host of

regulatory changes, includ-

ing stricter safety norms,

have increased cost of

production

High fuel prices : Prices

of petrol and diesel have

remained high due to volatil-

ity in international markets

and higher taxation by the

government here.

Increased competition :

India is one of the most com-

petitive markets in entry-level

segments, which has meant

lower profitability for most

companies.

REASONS

FOR POOR

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