Declining sales and piled-up inventories have forced India's largest carmaker, Maruti Suzuki, to go for a production halt for two days at its Gurugram and Manesar plants in Haryana that together manufacture over 15 lakh cars in a year.
Maruti Suzuki India (MSI) will halt production on Saturday and Monday. The decision comes after Maruti reported a nearly one-third decline in sales at 1.06 lakh units in August.
According to sources, this must be the longest shutdown in the recent history of MSI for reasons other than maintenance closure. Usually, the company keeps inventories for up to seven days to supply to dealers during a maintenance shutdown, which it undertakes twice in a year in June and December.
But, according to analysts, auto firms have an inventory pile-up of around 30 days for passenger vehicles. Maruti has been cutting production since March this year. Last month, the company had cut production by around 34%.
MSI had produced 1.11 lakh units in August as against 1.69 lakh units a year ago in the same month. It sold 1.06 lakh units in August compared to 1.58 lakh units in August last year.
While the Gurugram facility manufactures Alto 800, WagonR, Ertiga, S-Cross, Vitara Brezza, Ignis and Eeco, the Manesar plant produces Alto K10, Swift, Ciaz, Baleno, Baleno RS and Celerio.
BS-VI norms
Auto industry body SIAM said the transition to BS-VI emission norms from April 2020 has slapped fresh challenges on the automobile industry.
SIAM president Rajan Wadhera said on an average, each vehicle manufacturer is spending close to Rs 1,000 crore to upgrade all their model line-up to meet the new emission norms within a short span.
He said the entire value chain of the auto industry — from component suppliers to vehicle manufacturers and dealers — have been impacted by the slowdown.
Maruti Suzuki is not the only car manufacturer that has cut production in the past as many months. Several Indian carmakers have downsized in the wake of an economic slump.
With India's auto sales declining for the 10th straight month in August, many automobile manufacturers are even laying off workers.