Auto Ancillaries, Dealerships Facing More Job Losses Than Automakers, Says M&M’s Pawan Goenka

Job cuts at automakers are not alarming at this stage but it could be higher at auto parts suppliers and dealerships, according to Mahindra & Mahindra Ltd.’s Pawan Goenka.

“The velocity and speed of job losses in auto ancillaries and auto dealerships would be higher than OEMs (original equipment manufacturers),” the managing director of India’s largest tractor maker said in a press conference. “These players do not have deep pockets like OEMs and hence job losses and adjustments there happen quickly.”

The auto industry is yet to see signs of revival from the worst slowdown in a decade. Automobile demand in Asia’s third-largest economy has been falling since the Diwali festive season last year, forcing automakers to lay off contract workers and shut showrooms. That comes amid a consumption slowdown, pulling down GDP growth to its lowest in 20 quarters in the three months ended March.

Last week, India’s largest carmaker Maruti Suzuki India Ltd. sent nearly 10 percent of its contract workforce at its Gurugram, Haryana plant on leave without pay, BloombergQuint reported quoting people familiar with the matter.

Goenka, who refrained from giving forecast for the auto segment citing the slowdown in the sector, said he will wait for the government to intervene before giving any outlook. He, however, said that the tractor business is expected to remain flat.