It’s the worst slowdown in the last two decades to hit the
and now its impact is pushing Motown to skid row with some of the biggest names in the business announcing no-production days, laying off temporary staff and cutting down investment.
Car market leader Maruti Suzuki chairman R C Bhargava said in media interviews that “around 3000 temporary workers have lost jobs with Maruti Suzuki”. Others such as
Sundaram Clayton and Lucas TVS have announced no-work days on Friday. Component companies have been announcing capital expenditure (capex) cuts all through the first quarter of the financial year.
Motorcycle market leader Hero Motocorp said in a stock market filing that its manufacturing facilities “will be closed from August 15 to 18” partly reflecting “the prevailing market demand scenario”. Ashok Leyland has also announced two days in August as non-working days, sources said. Despite calls and messages, the company did not comment on the matter.
With vehicle makers idling plants, auto component companies are also slashing production. On Friday, two TVS group companies in the auto component segment announced their decision to go for non-working or no-production days. TVS group company Sundaram-Clayton declared August 16 and 17 as non-working days for its Padi factory. The auto component major, which supplies aluminium die cast products to domestic and global automotive OEMS, attributed the decision to the “business slowdown across sectors.”
Meanwhile, another TVS group company Lucas-TVS, has also declared non-working days for its employees. According to PTI, the company has shared a notification with its employees declaring August 16 and 17 as non-working days citing the slowdown. “A decision will be taken on how to offset the job losses on the non-working days; employees are requested to extend their cooperation”, it said. Lucas TVS had already announced non-working days last month.
Last week, auto component maker Bosch announced that it will stop production for 13 days at its plants in Tamil Nadu and Maharashtra. The company said that its Gangaikondan plant in Tamil Nadu will suspend production for 5 days while its Nashik plant will have 8 no-production days this month.
Component companies are also slashing their capex to sweat their resources better. In an investor-call recently, Bharat Forge ED Amit Kalyani said: “We expect the capex intensity to drop very significantly as we will cut down on all significant capex and only focus on sweating our assets.” Lumax Industries, in an investor presentation earlier this month, announced a capex of Rs 94 crore for FY19 compared to Rs 162 crore in FY18 – a nearly 42% cut.
According to SIAM, car and SUV despatches from factory gates fell a staggering 21.5% in the April-July period. Truck and bus despatches are down 13.5%, motorcycle and scooter numbers are down 13%. This is the sharpest drop in sales in the last 20 years.