Indian Auto Sector on a Potholed Road.

Far from resolving issues on hand, problems continue to pile up on the Indian automobile sector, making revival harder and possibly longer for the ailing sector. With continuing gloom and uncertainty around the Lok Sabha elections, the recovery process is likely to widen the woes of what was once considered one of the most lucrative automobile markets in the world.

From labour issues to high cost of ownership, rising fuel costs, high interest rates and even company policy; nothing seems to be going right for the sector. Japanese automobile maker Toyota can vouch for this. The company declared a lockout of their manufacturing facility in Bidadi (outskirts of Bangalore) after negotiations over wage increase with their workers failed. Incidents of labour unrest leading to temporary suspension of production is increasing. Major automobile makers such as Honda (two wheelers), Maruti and Mahindra have all faced worker issues in the last two years.

In Toyota's case, over 10 months of negotiations and 77 meetings did not yield much results except for workers first protesting on the shop floor and eventually leading to production slow down and finally the lockout. The developments are not helping their declining sales numbers. The company reported a 19.27% decline in February 2014 as they sold 11284 units when compared to 13979 units in the corresponding month last year.

'Lockouts lead to loss of production and impacts the supply chain as well. It impacts production planning,' Shekar Viswanathan, Vice Chairman, Toyota told Express. According to the company, they witnessed a total of 2000 units lost in the final 25 days of their talks with workers. But the losses are most likely to mount as the company announced that they will end the lockout on March 24 2014; a whole week after they declared to shut shop and avoid any untoward incident.

The New Indian Express