About one lakh temporary workers in the auto components sector lost their jobs between October 2018 and July 2019 due to the slump in the auto industry, the Auto Components Manufacturers Association (ACMA) said.
Auto component sales in the first half of the year declined by 10% to ₹1.79 lakh crore, while exports and the aftermarket segment grew, the industry body added.
“Primarily, it is the temporary employees who have lost jobs,” president of ACMA Deepak Jain said. “It was due to component makers adjusting production to demand.”
“The automotive industry is facing a prolonged slowdown,” Mr. Jain added. “The vehicle sales in all segments have continued to plummet for the last year. Considering that the auto component industry grows on the back of the vehicle industry, a current 15%-20% cut in vehicle production has inter-alia adversely impacted the auto components industry performance and investments.”
The slump in the auto industry has affected the performance of the auto components industry as well, resulting in lower sales.
“The second-half of 2018-19 saw a significant slump in vehicles sales that continued well into the first-half of 2019-20,” director-general of ACMA Vinnie Mehta said at a press conference.
“The component industry, in tandem, posted a some-what subdued performance with de-growth of 10.1% over the first half of the last fiscal, registering a turnover of ₹1.79 lakh crore.”
Going forward, Mr Jain added, the transition to BS-VI compliant parts and the implementation of safety norms will progressively increase the value-addition from the component industry.
While the overall turnover of the sector declined, exports at ₹51,397 crore saw a marginal growth of 2.7% in the first half of 2019-20 compared with the same period of the previous year. While exports to Europe witnessed a contraction, those to North America, Asia, Africa, South America, and Australasia all saw growth.
The aftermarket segment grew 4% to ₹35,096 crore in the first half of 2019-20 compared with the first half of the previous year.
Mr. Jain added that subdued vehicle demand, recent investments made on the transition from BS-IV to BS-VI, the liquidity crunch, a lack of a clarity on the electric vehicles policy, among others, have also had an adverse impact on the expansion plans of the component sector.
