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Contracts of 3,000 temporary workers not renewed, says Maruti chairman RC Bhargava

Bhargava said while the new safety norms and insurance costs impacted demand, a significant impact was due to nine states increasing road taxes by a substantial amount.

By: ENS Economic Bureau | New Delhi |
Updated: August 28, 2019 4:08:38 am
Maruti Suzuki, Maruti Suzuki job cut, Maruti Suzuki car sales, Maruti Suzuki jobs, Maruti Suzuki car sales drop Bhargava said over the past year, multiple factors led to a rise in final cost of cars, affecting their affordability.

Maruti Suzuki has not renewed the contracts of 3,000 temporary employees across its manufacturing plants, chairman RC Bhargava said on Tuesday, as the automobile manufacturer has been cutting production since February this year to control inventory pile-up amid a slowdown in demand.

Bhargava said over the past year, multiple factors led to a rise in final cost of cars, affecting their affordability. “Safety norms, increase in insurance prices and higher taxes have added substantially to the cost of cars,” the Maruti Suzuki India (MSI) chairman told shareholders at the company’s 38th annual general meeting.

He blamed state governments for the current slowdown in auto sales, saying that growth of the manufacturing sector and the economy is not entirely the responsibility of the Centre.

Bhargava said while the new safety norms and insurance costs impacted demand, a significant impact was due to nine states increasing road taxes by a substantial amount.

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“In all these nine states, there was a sharper dip in sales compared to others,” he said, adding that state governments have a lot more to do with the increase in a vehicle’s cost of ownership.

“It’s time states also partner to help the manufacturing sector grow … and achieve 25 per cent contribution from sector,” he told shareholders, adding the central government has partly done what it could do to revive demand.

The Centre on Friday announced lifting the ban on purchase of new vehicles by government departments and allowed auto buyers enhanced depreciation of 30 per cent. A proposed hike in one-time registration fee was also deferred to June 2020, which industry executives said will propel demand.

On electric vehicles, Bhargava said he believes that low cost or affordable electric cars for individual customers cannot be made available in the next few years as the technology to counter range anxiety and inadequate charging infrastructure will remain a barrier in the near term.

He said the advancement of technology for electric mobility in India is not as rapid as one would have thought it to be. “For an individual customer, who is a low-cost small car user, availability of affordable electric car which meets his requirement of range and charging is not likely to happen in the next few years.”

Stating that the number of electric vehicles (EVs) in the market are minute, Bhargava said even government officials using them currently are finding limited acceptance.

His comments came after several government officials using EVs from Tata Motors and Mahindra & Mahindra complained of lower range and poor performance.

The officials said while the firms claimed a range of 130 km when fully charged, they were able to do just about 85 km. —FE

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