Turbulent times for Indian automobile industry

Monday 04 March 2013, 12:16 PM by

Today’s times do not seem to augur well for the Indian automobile industry. If industry’s expert portal Naukri.com is to be believed, only 51 per cent of companies are likely to hire new candidates this year, owing to diminishing profits. Several companies could also be thinking of reducing the number of employees in an effort to streamline operational costs.

In the report from Naukri.com, the website quoted, “The Indian auto market has been facing turbulent times, with car sales growth pegged to be the lowest in last 10 years. A survey with recruiters from the auto sector echoed a dismal sentiment with only 51 per cent predicting new jobs to be created in 2013. With respect to cutting the number of employees, this report said, “Employers said that layoffs will happen at the 8-15 years experience levels, while new jobs will be created for the 4-8 years experience category.”

For the year 2013, the Society of Indian Automobile Manufacturers (SIAM) had said that the industry is pegged to grow at a rate of 0-1 per cent during the current fiscal, but this figure is definitely not in sight. In fact, it is for the first time that growth witnessed in the Indian passenger car sector is negative. This is the third consecutive month of falling sales since factors such as rising prices of petrol and diesel continue to hit the industry hard, as do the new initiatives such as increasing excise duty on Sports Utility Vehicles (SUVs) in Union Budget 2013. The SUV segment is one of the very few to have posted growth among automobiles, but in return it has been taxed heavily. In addition to an increase of 3 per cent on excise duty, an increase of 25 per cent on imported vehicles has also been declared.

The previous time domestic car sales witnessed a decline was in 2002-03, when it had went down by 2.09 per cent. The lowest domestic car sales had been witnessed during the global recession of 2008-09 when numbers grew by only 1.39 per cent.