Korean car maker Hyundai Motors India Ltd  said it will have to lay off 2,000 temporary workers, about one-fourth of its labour force, to tide over a decline in car sales. The company employs over 8,400 workers, of which around 3,300 are temporary.

The lay-offs are likely to begin in stages from January and will be one of the largest in the domestic automobile industry in recent months. "We will have to look at some cuts in shifts and production next year if the economy does not improve or demand does not revive," a company spokesman said.

Company sources said Hyundai will be reducing the number of shifts in the two units near Chennai from five to four and even three shifts in January (six months ago the company ran six shifts).

The production cutbacks are being made on the back of projections that exports, which account for the a third of the Indian company's revenues, will fall 25 per cent in 2009.

"We produce about 250 cars every shift and 1,600 to 1,800 cars a day. With exports projected to fall dramatically and domestic sales flat there is need for restructuring," the source said. Although December export numbers were good, most of these orders were placed three months ago when the meltdown had just begun. "We were only implementing old orders that will be over by the end of December, but the January orders are dismal," added the source.

The warning signs also came when Hyundai saw domestic car sales decline 23.57 per cent in November when it sold only 14,605 cars � the first time its sales fell this year. Like others, the company also faces and an inventory pile-up of more than 35 days against two to three weeks.

Buoyed by brisk sales of the i10 the Korean major has seen sales between April-November grow 19.52 per cent, at over 161,493 cars. The car maker is betting on the January launch of its small car model, the i20, to bolster domestic sales.

Growing inventories have forced several other auto makers to temporarily close plants or lay off temporary workers. Tata Motors [Get Quote], for instance, laid off 300 workers at its commercial vehicle plant in Jamshedpur and, according to local associations, has not renewed contracts of about 1,600 workers in its Pune plant.

Tata Motors, however, said temporary workers are hired and laid off based on the company's requirement throughout the year.