The Society of Indian Automobile Manufacturers (SIAM) today said the ongoing stand-off between Maruti Suzuki's management and workers at the Manesar plant was likely to impact the domestic passenger car segment, which had already been witnessing a slowdown, if the dispute prolonged.
SIAM also said the "needed" labour reforms could not be carried out as there was no consensus inside the government on crucial issues like laying off of permanent employees during slowdown in the market.
"The Maruti labour problem will affect the industry if it continues further," SIAM Director General Vishnu Mathur told reporters here when asked if the unrest will have any impact on the domestic passenger car segment.
The passenger car segment is already facing tough time in sales with sentiment among customers running low due to high interest rates and hike in fuel prices.
Domestic passenger car sales fell for the first time in July this year after 30 months of continuous growth, registering a 15.76% decline mainly due to the hike in lending rates and lower production by market leader Maruti Suzuki during the month.
Production at MSI's Manesar plant has been affected since Monday after the company decided to force workers to sign a 'good conduct bond' before entering the factory premises, following alleged "sabotage" and deliberate quality compromise with cars produced last week.
Talking about labour reforms, Mathur said, "The industry is looking for some reforms, which are needed at this moment. Unfortunately, there is no consensus in the government. We hope that in the next 5-year plan, there will be some consensus on labour reforms."
There should be some flexibility in "right sizing" the workforce during any kind of slowdown, he added.
"Of course, there should be safety mechanisms and the government must have some social security measures for that," Mathur added.
When asked about falling sales, he said, "The car sales in August are likely to fall again. We hope it will pick-up from this month as festive season is starting."
He, however, warned that any further hike in interest rates will severely impact the Indian automobile industry.
"The industry is suffering now. Any further hike will be very bad and this is a serious concern," he added.
