The current slump in the Indian automobile sector is forcing the auto makers to take decisions on cutting down on their workforce etc. The latest news is about Honda Cars India Limited (HCIL). The company has announced a voluntary retirement scheme (VRS) for its permanent employees at its manufacturing facility at Greater Noida on the outskirts of Delhi. There are around 1,000 employees in this plant and the VRS offer is open for all of them from January 28, 2020 and till February 17, 2020.
The VRS package appears quite attractive, since an employee can receive up to ₹50 lakh, depending on the number of years of service put in. Besides the lump sum amount, the regular payouts like gratuity, leave pay etc. are also payable to the employees. Honda Cars India is also assuring the employees opting for VRS that the company will bear their health insurance costs to the extent of ₹88,000 till they attain the age of 58, their normal age for retirement.
It remains to be seen how many of the 1,000 employees opt for the VRS package on offer.
To a lot of observers, more than this attempt at reducing the workforce at the Greater Noida plant, the larger question is will Honda Cars India decide to close down the plant itself going forward. The reason for this is that the company’s other unit at Tapukara, in Rajasthan is producing the largest selling models, like the Amaze and WR-V. While the Greater Noida plant is making the Honda City models, the newer version of this sedan will also be made in the Tapukara plant only. The other models being currently made in the Greater Noida plant are the Civic and CR-V, which don’t in any case do huge volumes. With such small numbers of vehicles being made, the Greater Noida plant could become unviable to operate and unnecessarily push up the cost of the cars.
Honda has decided against participating in the Auto Expo this year. Honda’s plight is not very different from what the automobile industry has been going through over the past one year.
Looking at the passenger cars sales, the calendar year 2019 saw 29.62 lakh cars being sold, whereas the figure was 33.94 lakh cars in 2018. If the financial year is taken into account, around 34 lakh cars were sold in 2017-18 and with two months to go for the year to come to an end, the figure is expected to be in the 30-lakh range only.