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Carmakers cut production due to low demand
Posted on 29 Jun 20121,816 Views Comments
Rising interest rates, hike in excise duty on cars in the Union Budget 2012-13 and fuel price hike has dampened growth of the Indian automobile sector. This has forced carmakers like Maruti Suzuki, Tata Motors, Hyundai and others to streamline production output
Maruti Suzuki is in the midst of a weeklong plant shutdown to trim its production cycle in July. A high level of inventory exists at its stockyard and the dealerships. "There is no respite in slowdown this month. In fact the inventory has increased since May. There would be some steps to rationalise shop floor operations, especially of petrol vehicles manufactured out of Gurgaon next month," a senior Maruti executive said.
Country's largest automaker by revenue, Tata Motors, faces a double whammy as sales of both its passenger cars and bigger vehicles like trucks and buses are tapering, thus necessitating plant closures.
It has stopped production of several vehicles, including light and medium commercial vehicles like 407 and 709, for the time being. Tata Motors shut its truck factory in Pune for three days earlier this week to align production with market demand and announced closure of its Jamshedpur plant for three days from June 28-30, besides trimming production at other facilities. "All different plants would have rationalised production as we want to keep our inventory under control," a senior executive of Tata Motors said.
Carmakers are largely trying to control stock of petrol cars, since numbers have spiralled as customers prefer diesel variants due to massive price difference in both the fuels. Toyota Kirloskar Motors, Italian carmaker Fiat and General Motors have streamlined their petrol cars production in tandem with the market demand. "Depending upon the demand and inventory situation, we may shut down our plant for 2-3 days next month," Fiat President & CEO Rajeev Kapoor said.
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