Around two lakh jobs have been laid off across automobile dealerships in the country in the last three months as vehicle retailers attempt to tide over the impact of the unprecedented sales slump, according to industry body FADA.
With no immediate signs of recovery, the Federation of Automobile Dealers Associations (FADA) fears that the job cuts may continue with more showrooms being shut in the near future and sought immediate government intervention such as reduction of GST to provide relief to the auto industry.
“The majority of job cuts have happened in the last three months... It started around May and continued through June and July,” FADA President Ashish Harsharaj Kale told PTI.
“Right now most of the cuts which have happened are in front-end sales jobs but if this (slowdown) continues, then even the technical jobs will be affected because if we are selling less, then we will also service less, so it is a cycle,” he added.
Asked how many jobs have been cut across the dealerships in India, he said, “Close to two lakh.”
“It is a guesstimate that our members have already cut 7-8 per cent of the jobs in most of the dealerships as the slump was drastic,” he added.
Around 2.5 million people were employed directly through around 26,000 automobile showrooms operated by 15,000 dealers. Another 2.5 million are indirectly employed in the dealership ecosystem, he added.
Showroom closures
The two lakh job cuts in the last three months are over and above the 32,000 people who lost employment when 286 showrooms were closed across 271 cities in the 18-months ended April this year, he added.
Stating that more dealerships have closed in the past three months, Kale said, “We are collating the figures again... In a few cases, some (dealers) have gone for the closure of outlets, not the main outlets but those which were put up anticipating some geographic reach.”
Elaborating reasons for taking the drastic step of cutting jobs, he said the ‘margin of error’ in the business in the past few years has gone down with cost almost doubling in the last three to four years.