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Tue, 21 Jan 2020

Northeast Today

Auto components sector sees 1 lakh temporary job losses

Auto components sector sees 1 lakh temporary job losses
December 07
12:23 2019

NET Bureau

The auto component industry’s turnover witnessed worst ever decline in the first half of the current fiscal leading to a job loss of around 1 lakh temporary workers till July this year, industry body ACMA said on Friday.

The turnover of the industry dropped to Rs 1.8 lakh crore in the April-September period, down 10.1% from nearly Rs 2 lakh crore in the year-ago period, Automotive Component Manufacturers Association (ACMA) said.

The industry body said the slowdown has also resulted in an investment loss of up to $2 billion during the period. Exports, however, registered a marginal growth of 2.7% to Rs 51,397 crore ($7.5 billion) during the period, while aftermarket segment grew by 4% to Rs 35,096 crore ($5.1 billion). Import of components declined by 6.7% to Rs 57,574 crore ($8.4 billion), ACMA said.

“The automotive industry is facing a prolonged slowdown. The vehicles sales in all segments have continued to plummet for the last one year,” ACMA president Deepak Jain told reporters here.

Considering that auto components industry grows on the back of vehicle industry, a current 15-20% cut in vehicle production has adversely impacted the component segment, he added.

The last time when the auto components industry witnessed a decline in turnover was in 2013-14 when it dipped by 2%, ACMA said.

On job losses, Jain said retrenchment has taken place from October last year till July 2019. “Primarily, it is the temporary employees who have lost jobs during the period,” Jain said, adding it was due to component makers adjusting production to demand.

He said a 10%growth would have added $6 billion of revenue, for which the corresponding investment could have been around $2 billion. “Therefore, the investment loss due to the slowdown would be around $1.5-2 billion,” he added.

Currently, he said the components industry’s capacity utilisation has come down to 50% from around 80% when the growth was at the peak. ACMA said subdued vehicle demand, recent investments made for transition to BS-VI from BS-IV, liquidity crunch, lack of clarity on policy for electrification of vehicles, among others had an adverse impact on expansion plans for the components sector.

Jain said on BS-VI transition alone, the auto industry as a whole has invested around Rs 80,000-90,000 crore, out of which the components sector has put in Rs 30,000-35,000 crore.

Source: Times OF India

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