Two lakh jobs cut in the last three months: FADA

About two lakhs of jobs have been lost at car dealerships in India in the past three months, while car retailers have a last resort to reduce their workforce in order to cope with the consequences of the unprecedented fall sales, according to the FADA industry.

In the absence of immediate signs of recovery, the Federation of Automobile Dealers Associations (FADA) feared that job cuts would continue with the upcoming closure of exhibition halls and asked the government to intervene immediately, for example by reducing the GST in order to lighten the automobile sector.

"The majority of job cuts have taken place in the last three months (…) .They started in May and continued in June and July," PTI told the President. of the FADA, Ashish Harsharaj Kale.

He added: "Currently, most of the cuts that have taken place are in sales at the beginning, but if this slowdown continues, even the technical jobs will be affected, because if we sell less, we will also serve less, so it's a cycle. "

When asked how many jobs had been cut at dealerships in India, he replied, "Nearly two lakhs".

"According to our estimates, our members have already removed 7 to 8% of jobs in most dealers, because the decline has been very strong," he added.

Some 2.5 million people were directly employed in 26,000 automobile showrooms operated by 15,000 dealerships. Another 2.5 million are indirectly employed in the dealer ecosystem, he added.

The two lakh job cuts over the past three months add to the 32,000 people who lost their jobs when 286 exhibition halls were closed in 271 cities during the period of 18 months ended in April this year, he added.

Kale said: "We are collecting the numbers again … In some cases, some (dealers) opted for the closing of outlets, not the main outlets, but those who were setting up anticipating some geographical scope ".

Explaining why he had to take the drastic step of cutting jobs, he said that the company's "margin of error" in recent years had actually decreased, with its cost almost doubled in the last three to four years.

"The margin we earn globally as a business has not increased, so if we go into a downturn, we end up with cash flow losses. dealers reduced their costs other than the labor … Until March this year, none of the dealers asked for a correction of labor because we thought that it was a temporary slowdown and it will soon recover, "he said.

However, he said, "the way the first quarter went on despite the good election results and the budget, the decline continued." It is now clear that a appropriate downturn has hit us, now dealers have resorted to downsizing. "

Calling the workforce "the most valuable dealer resource," Kale said, "This is the last thing we are trying to reduce. When the slowdown began, we first decided that we had to opt for inventory reduction. Most OEMs have supported us. by reducing other variable expenses we can, we did not touch the workforce until March and near mid-April. "

"It's the last resort because it's hard to find this manpower." We invest a lot in their training because it's about a particular industry, that's all. it is technical or field work, "he said.

According to figures from the Indian Automobile Manufacturers Society (SIAM), wholesale sales of vehicles of all categories decreased by 12.35% to 60.85,406 units in April-June, compared with 69.42,742 units in the same period from last year.

On the other hand, according to the data based on the records collected by the FADA, automotive retail sales decreased by 6% between April and June, to stand at 51 16 718 units at the end of April. during the first quarter of this year, compared with 54,422,317 units during the year. there is period.

The pbadenger car (PV) segment was the hardest hit, with sales continuing to decline for almost a year. In July, market leader Maruti Suzuki announced a 36.3% drop in wholesale sales of photovoltaic products in the domestic market, while Hyundai posted a 10% decline.

M & M sales decreased by 16%, Tata Motors sales by 31% and Honda Cars India Ltd (HCIL) sales by 48.67% during the month.

Calling for immediate government intervention, Kale said: "We hope, no matter what we have heard, that the government has taken note of the serious situation currently affecting the economy as a whole. , especially in the automotive sector.We hope to benefit from support for the automotive sector in the coming days or in the next two or three days ". He added that the auto industry had already submitted a request for a reduction in the GST.

"This is not a permanent demand.We know that the GST is such a huge development program for the government, but at the same time (it is necessary for) the revival of the auto industry. the auto industry) account for nearly 8% of GDP and 49% of manufacturing GDP, "said Kale.

He added that if the resumption of the monsoon gave hope, the resolution of the liquidity crisis, especially with the NBFC, would help the auto sector to recover after one of the worst sales losses in its history. .