After last year’s decline, the auto parts industry, which employs about 5 million people, grew 18 percent.

NEW DELHI: ACMA INDUSTRY AGENCY He said if the auto component industry continues to face headwinds due to the coronavirus pandemic, it could suffer major job losses. Weak demand and overcapacity will force auto component manufacturers to lay off employees to keep their business running, industry sources added.

Deepak Jain, Chairman, Automotive Component Manufacturers Association of India (ACMA) “Until demand recovers, there will be concerns about financial stress, job losses and liquidity management.”

Even if these companies reopen completely, they will not need as much labor because of low market demand, he said.

“So in this case, people are losing their jobs even if we don’t like them. It’s a temporary labor force, but it could be other labor if demand doesn’t come back,” Jayne noted.

He added that the automotive industry body SIAM due to COVID-19 predicts that annual sales in this sector will fall by 35-40%.

“So in this case, you will see a 50% decline in two years. If that’s the case, I obviously don’t know that employment is going to go down if demand generation is not realized or if there is support for on-demand generation.” Jane noted.

The auto parts industry, which employs about 5 million people, fell 18% last year and is expected to shrink a further 20-40% this year.

When asked whether auto component companies are planning to reduce investments due to the current situation, President Jain said, “There is no need to increase excess capacity at this point of time.”

He added that auto components sector is among the top five sectors under pressure, while others include hospitality and aviation.

“We’ve been in a 15 recession for a month now, so when we got into the coronavirus pandemic, we were in a very bad financial position,” Jayne said.

Asked what steps the government can take to regulate the industry, he said, “As an automobile industry, people have been looking forward to rationalization of GST for a long time. We also hope that the scrappage policy will be passed.”

Further, he added that auto loans should be prioritized to stimulate demand and car dealerships and petrol pumps should also be included in the Small Business Act.

Similarly, ACMA Secretary General Vinnie Mehta He said that while the recent announcements address some of the concerns of small and medium-sized enterprises (SMEs), large corporations, which create a large number of jobs, continue to face severe working capital shortfalls.

He added: “It would be good if the government could support the industry by paying a percentage of staff salaries.”

As a result, governments around the world, including Germany, Japan and the United States, support their domestic industries, Mehta said.

He added: “We are concerned that with little or no production, the industry may have no choice but to lay off workers, which could lead to social unrest when economic conditions are bleak.”

ACMA has about 850 organized industry member companies contributing more than 90% of the industry’s revenue.

Currently, the automotive components industry has a turnover of around $57 billion, which is 2.3% of India’s GDP.