About The Current Scenario
The current slowdown in Indian economy is affecting one sector after another. Recently we have noted the significant fall and problems in Aviation and cement sector .The next sector which has come up with major difficulties is automobile sector with a remarkable fall in sales figure due to higher interest rate, reducing IIP numbers , and slowdown in overall business.
The slump in the auto sector seems to be getting tougher. The lack of auto financing, which is how 95% of the people buy vehicles has been one of the biggest reasons why auto companies are in the state in which they are today. Fall in demand is leading to a huge build up in inventories and this is exerting further pressure on the already harassed companies.
Impact Of slowdown
1. The big corporates find difficult ways ahead at least for there survival.
2. Huge job cuts are increasing the figures of unemployment. Most of the workers under temporary placement has been terminated while new admission has paused.
Measures Adopted By Companies for Survival
The companies are opting to reduce there manufacturing capacity of plant to balance the sales figure with production and to avoid any overproduction. Either they are reducing the manufacturing capacity or they opt for keeping there plant close for a specified period of time to control the variable cost.
Ashok Leyland is planning to reduce monthly production target for November to 1,500 units from the average of 6,800 units it clocked each month in the first six months of this fiscal. In November, the company will also work fewer days to match with the production schedule.
Tata Motors is also not unaffected. It has shut down its Jamshedpur unit, the mother plant for its commercial vehicles, for three days, starting from today till Nov 8, 2008. Both the companies hope that by using these tactics, it will be able to avoid building up of inventory – both with the company and also with the dealers.Tata Motors in October reported a 29% fall in commercial vehicles sales at 19,154 units. HCV and MCV sales were most hit with a 48% fall as they are mostly always financed with loans. It also 'disengaged' 700 temporary workers from the Jamshedpur plant. For the common man on the street, survival is becoming a task.