Maruti Suzuki labor strike affects Suzuki Motors global production, reports decline in production for the first time in 11 years

Last year, India’s largest car manufacturer, Maruti Suzuki India Ltd. (MSIL) suffered quite a few setbacks as far as production of cars is concerned. Continuous labor strikes at their unit in Manesar, caused upheaval to MSIL during 2011. Because of the same MSIL labor strikes in India, Japanese car maker, Suzuki Motors, which holds 54% stake in Maruti Suzuki India Ltd., has announced that their global production is affected and has declined for the first time in 11 years.

Production for the last year dipped by 2.12% due to a 7% fall in output from MSI, which is equal to 50% of Suzuki Motor Corp’s annual profits. Suzuki Motors have production units in a many countries around the world, but not one of them is as large as Maruti Suzuki India.

The four month long labor strike at the Manesar unit lead to a production loss of 106,000 cars, during last year. Launch of new cars into the market has also been delayed due to excessive pending orders. Besides a loss of profits by 39%, labor strikes also lead to Maruti Suzuki’s market share dropping to 38% while sales dipped by 14% to 8,88,794 units from March to December 2011.

Maruti Suzuki now hopes to rectify this shortfall suffered during 2011 and hope to put in some greater efforts to ensure better results in 2012. Mr. S Nakanishi, Managing Director of Maruti said, “It is perhaps the toughest year for Maruti since inception. We expect a turnaround in the new year with four new launches and larger availability of diesel engines as per the market demand.”

Maruti has signed a new contract with Fiat India for 100,000 units diesel engines per annum from the Fiat facility at Ranjangaon. By 2014 end, MSI hopes to increase this number to 300,00 units annually, after which, MSI plans on producing their own diesel engines.