As India’s domestic passenger vehicle sales fell for the tenth straight month in August,
automobile company Ashok Leyland announced it will observe non-working days in five of its units.
The company had reported a sharp drop of 47 percent in its sales for the month of August. The slump has forced the company to shut down production in order to avoid the unsold inventory’s pile up.
The number of non-working days in Pantnagar, Uttarakhand is 18, 16 in Ennore, Tamil Nadu, 10 in Bhandara, Maharashtra, 10 in Alwar, Rajasthan and 5 in Hosur, Tamil Nadu.
The non-working days in its plants has resulted in workers losing jobs.
Industry Sluggishness, Temporary Shutdowns Affect Workers
The company issued statement said that it sold 9,231 units in August, which was 17,386 units down from what they had sold the same time last year.
The company reported a drop of 70 percent in its Medium and Heavy Commercial Vehicle truck sales in the domestic market in August. The sale of light commercial vehicles fell by 12 percent and total vehicle sales including all categories fell by 50 percent.
The company’s employees had received a letter that read,
“As already informed, due to continuing sluggishness and contraction in the commercial vehicle market, the need has arisen to continue to corrective actions to safeguard the interest of the company.”
These non-working days are expected to affect 5,000 workers, including 3,000 contract workers, reported The News Minute. Wages for these days are to be decided later by the Ashok Leyland Employment Union.
When the media channel contacted a spokesperson at the company, he refused to make an official statement, “No statement at the moment. When we have something to share we will notify the stock exchanges.”
Reports said that many contract labourers have been laid-off owing to no production.
August Auto Sales See Worst Decline in a Month
Sale of automobiles in India has crashed by 23.5 percent in August, the worst ever decline in a month since 1997-98.
According to the data from Society of Indian Auto Manufacturers (SIAM), the industry produced a total 12,020,944 vehicles, including passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycle in April-August 2019 as against 13,699,848 in April-August 2018: a slump of 12.25 percent.
The overall commercial vehicles segment fell by 19 percent, three-wheelers’ sales dipped by 7.32 percent, and two-wheelers’ sales declined by 14.85 percent.
Government Aid Necessary to Ease the Strain
The auto industry has been asking the government to consider a cut in GST to revive sales.
On 23 August, Finance Minister Nirmala Sitharaman introduced measures to boost the demand for the automobile sector in the country by increasing liquidity in the hands of the consumer in the form of easier access to loans.
Union Minister Nitin Gadkari on 5 September gave assurance of taking up the demand of GST reduction with the finance minister.
“It is your (industry’s) demand that there should be reduction in tax of petrol and diesel vehicles. Your suggestions are good. I will take your message to the finance minister,” Gadkari said at the annual SIAM convention.
The government is keen for a GST rate cut from 28 percent to 18 percent for the sector, but the downfall would be the huge loss in revenue and face opposition from a few states. The Fitment Committee is expected to take this assessment to the GST council meeting on 20 September in Goa.
Auto makers expect the rate-cut to come before the festival season kicks in, as it a major window for sales.
Meanwhile, auto major Maruti Suzuki announced a two-day shutdown of its plants in Gurugram and Manesar, Mahindra announced a production shutdown of 8-14 days, Tata Motors, Hero and TVS groups announced brief shutdowns to cope with the slowdown.
(With inputs from The News Minute)
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