To keep up with the consumption-led slowdown, automobile major Maruti Suzuki India has shed over 1,000 temporary employees, is planning to freeze hiring and look at other cost-cutting measures to tide over the current deceleration.
“Temporary employees are the first to get impacted and the same has happened in this case too,” a source familiar with the development said.
According to industry observers, month-on-month sales de-growth and inventory pile up at the dealerships have forced not just Maruti Suzuki India but other auto companies also to curtail production, which will eventually cause job losses at both factory and retail levels.
The slowdown has not only decelerated the sales but also eroded the automobile companies’ bottom lines.
On Thursday, Maruti Suzuki India reported a 33.5 per cent decline in total sales, including exports for July.
The company’s total sales fell to 1,09,264 units from 1,64,369, recorded in July of 2018-19. Similarly, the company’s domestic sales (domestic and OEMs) declined by 35.1 per cent to 1,00,006 units in July year-on-year (YoY).
Although, the total domestic passenger vehicle sales was lower by 36.7 per cent to 96,478 units YoY, the company’s light commercial vehicles’ sales in the country inched up 0.5 per cent to 1,732 units.
Exports declined by 9.4 per cent to 9,258 units from 10,219 shipped during July of FY19.
Last month, the automobile major reported a 27.3 per cent drop in its net profit for the first quarter of 2019-20.
Accordingly, the company’s net profit for the quarter fell to Rs 1,435.5 crore compared with Q1FY19, largely on account of lower sales volume and higher depreciation expenses.
Besides, the company’s net sales declined by 14.1 per cent to Rs 18,735.2 crore from Rs 21,810.7 crore reported for the same period during the previous year. “The company sold 4,02,594 vehicles during the quarter, lower by 17.9 per cent compared with the same period of previous year,” the company had said in a statement.
“Sales in the domestic market stood at 374,481 units, lower by 19.3 per cent,” it said.