Maruti Suzuki India has reduced the number of temporary workers at its plants to cope with sales slowdown. MSIL has in its guideline already announced 15 percent YoY production reduction owing to auto industry slowdown. This will also aid in inventory reduction at the dealer level.
Across the industry, average inventory for PVs declined to 30-35 days in June. The number stood at 35-40 days in May 2019. Maruti’s PV market share dropped to 51 percent in June 2019. Down from 53 percent at the end of June 2018.
Though MSIL remains atop the chart as the biggest domestic seller, its sales volumes have contracted. In July 2019, this number fellow below lakh units. Not only has Q1 2019-20, but July too has followed the weak lead. MSIL domestic sales for the month is down 36.3 percent to 98,210 units, down from 154,150 units sold in July 2018.
Legend has it, every second car sold in India is from the house of Maruti. While that sequence continues to hold true, volumes are contracting. Maruti Suzuki told Reuters it employed 18,845 temporary workers on average in the six months ended June 30.
This is 6 percent lower, or 1,181 from the same period last year. MSIL also said job cuts had accelerated since April. This is in line with the industry’s poor showing since start if FY 2019-20. MSIL’s permanent workforce has not been affected.
MSIL is using this period of low activity to continuously push it’s updated vehicles to the market. To begin with, Maruti has already introduced a wide range of BSVI compliant cars. This includes Baleno, Alto, Dzire, Swift, WagonR, and now Ertiga petrol.
With BSVI mandated from April 1, 2020, the company is well within track to ensure smooth transition. Costs involved in meeting BSVi norms has resulted in discontinuation of diesel vehicles up to 1.3 litre-engine capacity by year end. Transition from BSIV to BSVI norms, and the fallout of small diesel cars has resulted in sales reduction.
With the need for cleaner and greener vehicles determining future course of market preference, Maruti is focused on CNG vehicles. Production of MSIL CNG cars increased by 40 percent in 2018-19. The target for the current FY is near 50 percent. MSIL expects steady increase in CNG vehicle sales.
