Indian Auto Industry Hints Major Crisis as Hero Motor Corp Plans to Close it’s Manufacturing for Four Days in Aug 2019

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In a very concerning alram for te Indian auto industry, India’s largest two-wheeler maker Hero MotoCorp announced plans to close its plants for four days in August, deepening the gloom in the automobile industry.

The crisis seemed to worsen with Sundaram Clayton, the auto component maker of the TVS group, also announcing that it would be shutting its Padi factory in Tamil Nadu for two days owing to the slowdown in the automotive industry.

Maruti Suzuki India, the country’s largest carmaker, confirmed that over 3,000 temporary employees had lost their jobs because of the slump. That contracts were not renewed had been reported earlier but the figure was not clear.

The automobile industry reported earlier this week that passenger vehicle sales had tumbled to a 19-year low of 1,825,148 units in July.

Our manufacturing facilities will be closed from August 15 to 18. While this has been part of the annual holiday calendar on account of Independence Day, Raksha Bandhan and the weekend, it also partly reflects the prevailing market demand scenario,” Hero MotoCorp said in a regulatory filing with the stock exchanges.

In July, the company had registered a 22.9 per cent drop in sales at 511,374 units.

Sundaram Clayton, a manufacturer and supplier of aluminium die cast products to domestic and global automotive original equipment manufacturers, said it had declared August 16 and 17 as non-working days at its Padi factory.

“This is due to business slowdown across sectors,” Sundaram Clayton Ltd said in a statement.

Earlier this month, Tata Motors and Mahindra & Mahindra had also said they were suspending automobile manufacturing in order to adjust production to the market demand.

While M&M will be suspending production for 8-14 days in this quarter, Tata Motors has said it will take steps to align its manufacturing with the tapering demand.

Auto components major Bosch has announced it will temporarily stop production for 13 days at its two plants at Gangaikondan, Tamil Nadu, and Nashik, Maharashtra.

Bosch managing director Soumitra Bhattacharya had said there would be “manpower adjustments” although “every opportunity will be extended for reskilling and redeployment, to align with adjustment of portfolios and competencies”.

The Narendra Modi government has been under pressure to come up with a package of measures to shore up the fortunes of the automobile industry which is critical to the economy as it employs 35 million workers directly and indirectly and accounts for nearly half of the country’s manufacturing output.

The Prime Minister’s Office has asked the finance ministry to cobble together a sector-specific stimulus package that is expected to address the woes of the automobile industry, which employs 35 million workers directly and indirectly.

SMEStreet Desk

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