CHENNAI: Pinched by the worst slowdown in the automobile industry since liberalisation, Indian auto component companies are cutting back on investments, laying off casual labour and reducing production to cut costs. According to sources in the automobile industry, the slowdown has hit tier-2 and 3 suppliers really hard, particularly those that do not have an overseas partner or did not make intelligent overseas acquisitions during the boom years.
"Most auto component companies in India have the resilience to manage a slowdown for a quarter or two but the current scenario is now beginning to pinch them really hard," said the vendor development head of a mass market big volume car manufacturer. "Many component partners are looking to reduce working shifts in keeping with production cuts by the vehicle makers and lay off casual labour. Investment cuts and other cost saving initiatives are also on the rise," he said.
Surinder Kapur, chairman, Sona group, agreed. "Right now it has become common practice in the industry to work fewer shifts depending on the customer and more or less we are now down to working five days a week rather than six or seven days in an effort to control costs and inventory. The focus is to cut material and overhead costs as well as connected costs like travel costs and even postpone investments," he said.
"Most auto component companies in India have the resilience to manage a slowdown for a quarter or two but the current scenario is now beginning to pinch them really hard," said the vendor development head of a mass market big volume car manufacturer. "Many component partners are looking to reduce working shifts in keeping with production cuts by the vehicle makers and lay off casual labour. Investment cuts and other cost saving initiatives are also on the rise," he said.
Surinder Kapur, chairman, Sona group, agreed. "Right now it has become common practice in the industry to work fewer shifts depending on the customer and more or less we are now down to working five days a week rather than six or seven days in an effort to control costs and inventory. The focus is to cut material and overhead costs as well as connected costs like travel costs and even postpone investments," he said.
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