On the back of long slowdown in the automobile sector, dealer showrooms across the country have cut around 2 lakh jobs in the past three months, said the Federation of Automobile Dealers Associations (FADA). The new number does not include 32,000 people who were fired when 286 showrooms were shut down across 271 cities in the 18-month period ended April this year.
The economic slowdown had just hit the indian industry causing major meltdowns in financers and banks. I was scheduled to visit a leading car financier to discuss ways to improve business on a rainy day.
The job cuts come in the wake of ACMA warning of about 10 lakh jobs in danger as sales are down since 2018. Component and original equipment manufacturers have already cut down production days as workers are left with no work.
When I walked into their huge office in the middle of the day, I realised how bad a slowdown can hit. In an office with over 100+ seats, I saw only 3 occupied. The entire office reminded me of a post-apolcalyptic scene right out of Hollywood.
When I asked the Relationship Manager, he said that they had been very aggressive and had dished out loans to all profiles. Now the slowdown had hit everyone hard. Customers had defaulted on loans. Teams were struggling to recover and push business at the same time. The Head Office had pulled the plug on the car loan portfolio. Entire teams had been asked to leave overnight and the office was also being shifted due to high rentals.
Around 2.5 million people were employed directly through around 26,000 automobile showrooms operated by 15,000 dealers. Another 2.5 million are indirectly employed in the dealership ecosystem.
The April-June quarter also saw passenger vehicle sales registering steepest fall in nearly two decades while decline in overall auto sales was the steepest since the 2008 global economic crisis.
Fast forward to today. A slowdown in Auto industry has had cascading effects on Component manufacturers, financiers, insurance firms, OEMs and now on dealerships. The hardest hit are the temporary workers and frontline staff at companies and dealerships.
Will a miracle save the Auto industry? Or will 2008 repeat itself?