Car sales drop for 9th month, temporary workers face the heat

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New Delhi: With car sales in India falling for a record ninth month in a row in July posting 7.4 per cent decline and that of heavy and medium commercial vehicles dipping for 17th month in succession, industry body SIAM on Monday said auto sector has started retrenching temporary workers.
According to the latest data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales declined to 1,31,163 units in July this year from 1,41,646 units in the same month of 2012.
While total sales of commercial vehicles dropped by 14.93 per cent to 55,301 units from 65,008 units in the year-ago period, heavy and medium commercial vehicles (M&HCV)sales were down 19.88 per cent at 18,611 units.
"It is a very serious situation for the industry. The original equipment manufacturers (OEMs) have started adjusting temporary and casual workforce," SIAM Director General Vishnu Mathur told reporters here.
While he did not share the exact number of temporary workers affected by the downsizing, Mathur said: "In the manufacturing sector, not restricted to auto sector alone, companies by and large tend to keep more temporary and casual workers."
According to SIAM estimates, the OEMs employ a total of about two lakh workers, another five lakh by component makers while four lakh are employed at dealer and service centres.
While Maruti Suzuki India (MSI) has already asked some of its temporary workers at the diesel engine plant at Manesar to go on indefinite leave, Toyota Kirloskar Motor also confirmed that it is "currently not renewing contracts of the temporary employees", without specifying details.
Mathur further said the demand slump has affected across the segments. "For the total passenger vehicles, including cars, July was the 8th straight month of decline. Similarly, for motorcycles and grand total of all categories, it was the 6th straight month of decline."
Totalsales of vehicles across categories registered a decline of 2.08 per cent to 14,15,102 units in July 2013 as against 14,45,112 units in the same month of 2012.
He said in the wake of the continuous decline in automobile sales, SIAM has approached the government seeking stimulus package, including reduction in excise duty, fleet modernisation and put an end to ban on new government vehicle purchase that has been on since May last year.
The overall economic factors, high interest rates, fuel prices and low sentiments continue to hurt demand, although new model launches such as Honda Amaze, Ford EcoSport have been able to bring "some excitement in the market", he added.
In July, market leader MSI posted 10.88 per cent increase in its domestic car sales at 63,040 units, while that of rival Hyundai Motor India were down by 5.67 per cent at 25,939 units. Tata Motors' car sales were down by 59.59 per cent at 8,546 units during the month.
Mahindra & Mahindra's utility vehicle (UV) sales were down 30.10 per cent in the month at 14,503 units.
SIAM said the UV segment, which was doing well in earlier months, has been hurt by the hike in excise duty to 30 per cent. In July, the segment saw a decline of 17.53 per cent at 37,010 units.
"There is a correlation in the drop of UV sales and excise hike. It was growing at high double digits till March, when it grew by 34 per cent, but then in April it came down to a growth of just 3.99 per cent. Since then the segment has been struggling to grow," Mathur said.
According to the SIAM data, domestic motorcycle sales declined by 1.52 per cent to 8,09,312 units in the last month, from 8,21,821 units in the same month previous year.
Market leader Hero MotoCorp (HMC) posted a decline of 3.79 per cent at 4,20,397 units. Bajaj Auto also saw a decline of 23.61 per cent at 1,53,173 units, while Honda Motorcycle and Scooter India (HMSI) saw its bike sales grow by 38.27 per cent to 1,40,611 units in July this year.
The scooters segment saw a growth of 9.80 per cent to 2,71,438 units during the month, SIAM said.
HMSI's scooter sales grew by 7.69 per cent at 1,35,584 units, while that of HMC jumped by 57.6 per cent at 56,798 units. TVS Motor Co saw its scooter sales decline by 13.94 per cent at 35,010 units. Total two-wheeler sales in July 2013 declined by 0.06 per cent to 11,31,992 units from 11,32,696 units in the same period of previous year, SIAM said.
According to SIAM, three-wheeler sales in the country declined by 6.14 per cent at 41,570 units.
When asked if automobile sales could pick up in the festive season, Mathur said: "There is hope. We have had a good monsoon this year as we have said earlier. Companies are preparing for the festive season with new launches. We hope that there will be someting positive in the festive season."