Maruti Suzuki India cuts over 3,000 jobs, cites economic slowdown as reason

Maruti Suzuki India (MSI), India's largest carmaker have handed pink slips over 3,000 employees due to the unprecedented slump in the auto industry. MSI Chairman RC Bhargava said that contracts of over 3,000 temporary employees were not renewed due to the slowdown. He, however, asserted that the permanent workers of the company have not been impacted due to the move.

"Around 3,000 temporary workers have lost jobs with Maruti Suzuki. This is a part of the business, when demand soars, more contract workers are hired and reduced in case of low demand," Bhargava said while responding to a query on whether the current slump and production cuts have led to job cuts in Maruti.

The MCI chairman also cautioned that "fewer automobiles (sales) will impact jobs on a larger scale" as the the sector creates job in the economy from sales, service, insurance, licensing, financing, accessories, drivers, petrol pumps and transportation.

He, however, expressed hopes that rural sales may pickup in the upcoming festival season due to the good monsoon. Speaking about the auto sector's stimulus package demand from the government, Bhargva said, "If government makes an announcement and takes positive actions it should help improve the situation."

"Personally, we would like to see GST benefits linked to greener/cleaner cars...The government gave tax cut on EVs but hybrid should be given duty cut. There should be tax cut on CNG vehicles," he added.

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Due to poor demand, India's auto industry is facing the worst ever slump, which resulted in over 3,50,000 layoffs since April. The downturn in sales have forced companies in the auto sector to shut down their factories and axe shifts.

According to a Reuters report, slumping sales of cars and motorcycles have forced automakers, parts manufacturers and dealers to laid off these workers. While car and motorcycle owners handed pink slips to at least 15,000 employees, component manufacturers laid off 100,000 employees. The remaining layoffs came at dealers end with many of them closing.

In a meeting with Finance Minister Nirmala Sitharaman last week, auto industry leaders, including Bhargava, M&M President - Automotive Sector Rajan Wadhera, who is also president of SIAM, along with representatives from components sector body ACMA and dealers body FADA drew attention to the challenges, including job losses, faced by the industry.

During the meeting, the auto industry broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand, he said.

Terming the meeting as “only consultative process”, Finance Secretary Rajiv Kumar said, “We have heard them. We are compiling (demands from the auto industry) and we will look at it.” So far, the government has not announced any specific revival package for the automobile sector.