Salaries to rise, even if sales do not, decide automobile firms

While sales of automobiles for the financial year 2008–2009 grew by less than 1 per cent, two-wheeler and passenger vehicle manufacturers have effected salary hikes across all levels of employees for the current year.

Commercial vehicle manufactures like Tata Motors and Ashok Leyland also plan to hike salaries for their employees, even though demand for large CVs dipped by 33 per cent in the year.

The highest pay hikes for the current year are set to come from Maruti Suzuki and Hero Honda. As part of its ongoing 25th anniversary celebration, Hero Honda gave a special across-the-board anniversary salary hike of around 9 per cent in January. This will be followed by the annual wage hike, which company officials say will be more than last year’s average 10 per cent hike.

Despite witnessing a 23 per cent dip in sales last year, Bajaj Auto has announced a 7 per cent hike across all levels of its employees, lower than last year’s 10 per cent hike. Plus, the Pune-based manufacturer has effected a 7 per cent hike for executives entitled to performance-linked bonuses. The ratio between fixed and variable salary is in the ratio: 70:30.

HR experts say salary hikes during difficult times are an attempt by companies to generate a positive, feel-good effect among employees, who fear losing their jobs should the downturn persist. “Firstly, salary hikes of this nature mean companies see a trend reversal in auto sales. Demand is creeping in. Next, pay hikes not only boost employee morale, it also directly boosts performance, says Krishna Prakash, Managing Partner of EMA Partners International. The country’s largest manufacturer of passenger vehicles, Maruti Suzuki, despite a less than impressive sales volume growth of 1.45 per cent for the year ending March 2009, plans to give a salary hike. Last year, it gave an average hike of 15 per cent.