Maruti Suzuki India Limited, leading automakers in India, have been experiencing reduced sales over the past many months. To counter lower sales and piling stocks, the automaker has resorted to production cuts.
The month of June 2019 made it 5 consecutive months of production cut wherein Maruti Suzuki slashed total passenger vehicle production by 16.34 percent. Including Super Carry LCV, production dipped 15.6 percent to 1,11,917 units as compared to 1,32,616 units produced in the same month of the previous year.
Production in the mini segment which included the Alto, production was cut by 48.2 percent to 15,087 units in June 2019 as compared to 29,131 units produced in June 2018. Production of the WagonR, Swift and DZire was also reduced by 1.46 percent to 66,436 units in the past month as against 67,426 units produced in the same month of the previous year.
Utility Vehicle production fell by 5.26 percent to 17,074 units in the past month as compared to 18.023 units produced in June 2018 while production of vans dipped 27.87 percent to 8,501 units last month as compared to 11,787 units produced in June 2018. This cut in production in June 2019 follows a total production cut of 18 percent in May and 10 percent in April. Production was also cut by 20.9 percent in March and 8 percent in February 2019.
Not only Maruti Suzuki, Tata Motors and Mahindra and Mahindra have also reported adjustment in production so as to deal with the steep fall in sales and rising inventories. This is especially noted in terms of production cuts for the Tata Tiago and Tigor, both of which are among the company’s highest selling models.
The company cut production of these two models by 53 percent in May 2019 to 5,341 units while sales dipped 60 percent as compared to sales in May 2018. Mahindra also reported a slump in sales and had to shut down its production plants for up to 13 days in May 2019, due to the low demand and would be observing ‘No Production Days’ ranging between 5 -13 days in various plants during first quarter of FY19-20
This scenario has been noted by the automobile sector ever since the past festive season when baring October last year, when sales went up 1.55 percent, passenger vehicle sales have been in the slow lane for 10 out of the past 11 months. Analysts expect the decline in sales to continue for a few more months. One can expect auto sales to start increasing from early next year.