Hit by auto sales decline, market leader Maruti Suzuki cuts 3,000 contract jobs

The country’s top auto maker, Maruti Suzuki Ltd has said it is cutting down on contract employees in its factories by around 3,000, following poor sales over the past few months.

The company’s AGM was held on Tuesday and Chairman RC Bhargava addressed the shareholders on various issues being faced by the industry.

In his opinion, the governments in different states were responsible for the current slump in the passenger car sales. According to him, there has been a steep increase in the registration /road tax charges collected by the state governments which has deterred car buyers from going ahead with their purchases. He said the cost of insurance too has gone up. For the manufacturers, the input costs have also been increasing. Compliance with safety norms is another area where costs are going up. He said there is a direct correlation between the increase in road tax charges and decline in sales, particularly in nine states. He feels at least the central government has done its bit to alleviate the crisis.

He was possibly referring to the twin announcements by the Finance Minister, last week, of the ban being lifted on the government departments buying new vehicles and enhancing the depreciation on cars from 15% to 30%.

On the issue of the government giving a huge push to the electric vehicle segment, the Maruti chairman had a different take. He felt the real proliferation of electric vehicles in the Indian context is still some years away. He claimed even in the government, those officers who are using electric cars supplied by Mahindra and Tata, are not happy with the vehicles. The range the cars are promised to run on a single charge is quite low, less than 85km.

There has been very little progress on the creation of infrastructure to handle electric vehicles.