Auto sales slowdown: Mahindra and Mahindra extends production suspension by three days amid stock pile-up in market

With the slowdown in the auto sales continues to hit the domestic vehicle manufacturers, auto major Mahindra and Mahindra has reportedly extended production suspension by three days in the wake of inventory pile-up, said a media report. Mahindra has reportedly extended plant shutdown by three days due to sufficient stocks in the market to meet the requirement, said a report in NDTV. On Friday, Mahindra & Mahindra had said it would suspend production at its automotive manufacturing plants in the ongoing quarter, ranging between 8-17 days, in order to adjust production with sales requirements, reported PTI. The company had earlier said in August that it would be observing no production days for 8-14 days across its automotive sector plants in the July-September quarter. [caption id=“attachment_4225945” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The homegrown auto major would suspend production for three additional days during the quarter as compared to the disclosure made on 9 August 2019, Mahindra & Mahindra said in a regulatory filing. Besides, the company said it will observe no production days in the farm equipment sector ranging between 1-3 days by the end of this month. “The management does not envisage any adverse impact on the availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements,” it added. Ashok Leyland to suspend work this month On 9 September, commercial vehicles major Ashok Leyland had said it would suspend work at its various manufacturing facilities across the country this month in order to adjust production with market demand. The Chennai-based firm announced 16 non-working days for its facility in Ennore, five days at Hosur (Tamil Nadu) unit, 10 days each in Alwar (Rajasthan) and Bhandara (Maharashtra) unit and 18 days in Pantnagar (Uttarakhand) facilities. The company’s move comes in the wake of an unprecedented slowdown in the domestic automobile industry, forcing auto companies to take production cuts in order to reduce inventory at dealerships. Maruti shuts down two facilities for two days Early this month, market leader Maruti Suzuki India (MSI) had announced to shut down its Gurugram and Manesar plants in Haryana for two days after the company reported record fall in sales. MSI said it would halt manufacturing operations at the two manufacturing facilities on 7 and 9 September.

Reeling under severe slowdown, Maruti Suzuki India—largest carmaker by market share— reduced its production by 33.99 percent in August, making it the seventh straight month that the country’s largest carmaker reduced its output.

Early last month, Maruti Suzuki had reportedly decided to implement single shift system in all its plants including Manesar giving signals of a production cut in the wake of a persistent slump in the demand for vehicles. The country’s biggest carmaker had said that it had cut the number of its temporary workers to cope with a slowdown in auto sales, adding to the jobless problem in Asia’s third-largest economy. The company had said in an email sent to Reuters it employed 18,845 temporary workers on average in the six months ended 30 June, down 6 percent or 1,181 from the same period last year. The company also said job cuts had accelerated since April. Demand slump hits two-wheeler sector too The demand slowdown affected the otherwise healthy two-wheeler sector too this time forcing the manufactures to suspend production.

Suzuki Motorcycle India had decided to hold back its planned investments on capacity enhancement due to the ongoing slowdown in two-wheeler sales and expectation of a hit in the market by the transition to stricter BS-VI emission norm from BS-IV in April 2020, according to a senior company official.

Last month, TVS group auto component maker Sundaram-Clayton Ltd (SCL) had said it would be shutting its Padi factory in Tamil Nadu for two days owing to a slowdown in the automotive industry, joining two-wheeler major Hero MotoCorp which also announced the closure of its plants for four days. SCL, a manufacturer and supplier of aluminium die-cast products to domestic and global automotive OEMs, said it has declared 16 and 17 August, 2019, as non-working days for its Padi factory. On the other hand, Hero MotoCorp said its manufacturing facilities would be closed from 15-18 August 2019, it said in a regulatory filing. Nitin Gadkari assures help With the crisis in the auto sector mounted, Union Road Transport Minister Nitin Gadkari early this month had assured the automobile industry of all possible support from the government, including taking up the demand of Goods and Services Tax (GST) reduction with finance minister Nirmala Sitharaman. — With inputs from agencies