Nasik: Vinayak Govardhane owns a unit which makes start gear for cars and goods [commercial] vehicles. His unit – Govardhan Plastocane – is one of the major ancillaries in Nasik's automobile zone. But for the last four months, Govardhane's business has taken a hit. "We used to make 3,500 gears per day. But as demand in this sector has declined, gear production is reduced to hardly 1,200 pieces," he said while speaking to NewsClick.
India is witnessing one of the most severe slowdowns in automobile industry in the last 20 years. According to the data released by Society of Indian Automobile Manufacturers (SIAM), ‘the current phase of decline is even worse than period of global slowdown of 2008-09 or 2011-12’s aftershocks’. The fall in automobile sale in the first quarter of 2019-20 is almost 12.35%. At the same time, production in this period has also fallen to 10.53%. As per numbers, around 80 lakh vehicles were sold in the same period of last financial year which has now come down to 72 lakh vehicles.
The figures of June 2019 are starker in comparison with the figures from June 2018. Vehicle sale fell by 12.34%; whereas, companies cut down the production by almost 13%. The worst-hit sector is passenger cars, which saw a decline of 24%. For goods carrier, the fall was 18% and for scooters, 15%. Against this backdrop, there are thousands of people like Govardhane, who manufacture and provide different products to the industry, are forced to deal with the slump.
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"We had 60 workers. Now, the number is reduced to 27. If you visit this industrial area of Nasik, you will get to know that almost every company has no option but to reduce the number of workers. Otherwise, survival is not possible now," said Govardhane.
Two major issues have obviously arisen with the slowdown: job cuts and cash crunch. As demand has now slowed down, the payments are also getting delayed. Govardhane explained: "It is a chain reaction. We send our products to gear companies. They send it to the automobile companies then. If they are facing delay in payments, we too will have to bear with it.”
The workers employed by the dealers and vendors in the automobile industry are also in trouble. The NewsClick met three dealers from Mumbai, Pune and Nasik mainly dealing in cars, goods vehicles and two wheelers.
On the other hand, the dealers in the two-wheeler segment are not much affected as of now. "Though there is a decline in sale, we are doing still good. The non-geared two wheelers are still in demand, mainly by the college-going students living in urban areas," said a two-wheeler dealer based in Pune.
But the car dealers from Mumbai remain worried. "The sale is going further down every month. If we compare it with the sale from March this year, the slump is of about 20% for the cars segment," said a dealer from Eastern suburb of Mumbai. He also pointed out that the sale of small cars, generally bought by the middle-class families, is shrinking fast. "Generally, people who want to buy a car on Ganesh Festival or Dussehra, start coming for enquiry by July. That is not happening now. It’s a clear sign of the fact that the market is going down," he said.
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NewsClick came across two showrooms – one in South Mumbai and one in Pimpri – where salaries of the workers are getting delayed. "For the last three months, we are getting salaries late. We are yet to receive our salary for the last month," said a worker from a showroom in Pimpri.
The slowdown is having consequences also for the industries for the sectors that cater to the workers employed with the automobile companies. In Chakan – an area near Pune which is considered as the biggest automobile manufacturing hub of the country – many local canteens that provided meals via tiffin service are seeing a decline, owing to the job cuts.