Auto sector crisis deepens: Maruti Suzuki cuts production for 8th straight month in September by over 17%

  • Maruti Suzuki India produced a total of 1,32,199 units in September as against 1,60,219 units in the year-ago month

  • Production of utility vehicles such as Vitara Brezza, Ertiga and S-Cross declined 17.05% to 18,435 units as compared with 22,226 units a year ago

  • Light commercial vehicle Super Carry's production was also trimmed to 1,935 units last month from 2,560 units in September 2018

After the country's largest carmaker Maruti Suzuki India (MSI) reduced its production production by 33.99 percent in August, making it the seventh straight month it reduced its output, it has again reduced its production in September by 17.48 percent, making it the eighth straight month it has lowered its output.

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.

MSI produced a total of 1,32,199 units in September as against 1,60,219 units in the year-ago month, Maruti Suzuki India (MSI) said in a regulatory filing.

Passenger vehicles' production last month stood at 1,30,264 units as against 1,57,659 units in September 2018, a decline of 17.37 percent, it added.

Production of mini and compact segment cars, including Alto, New WagonR, Celerio, Ignis, Swift, Baleno and Dzire stood at 98,337 units as against 1,15,576 units in September last year, down 14.91 percent, according to a PTI report.

Similarly, production of utility vehicles such as Vitara Brezza, Ertiga and S-Cross declined 17.05 percent to 18,435 units as compared with 22,226 units a year ago.

 Auto sector crisis deepens: Maruti Suzuki cuts production for 8th straight month in September by over 17%

Representational image. Reuters.

Mid-sized sedan Ciaz saw its production reduced to 2,350 units in September from 4,739 units in the same month last year.

Light commercial vehicle Super Carry's production was also trimmed to 1,935 units last month from 2,560 units in September 2018, the filing said.

In August, the automaker had cut its production by 33.99 percent at 1,11,370 units.

Tata Motors also reported a 63 percent drop in production of passenger vehicles in September at 6,976 units as compared to 18,855 units in the same period last year.

All the major automobile makers, including MSI, Hyundai, Mahindra & Mahindra, Tata Motors, Toyota and Honda, have reported double digit decline in domestic passenger vehicle sales in September as onset of the festive season failed to lift the ongoing slump in the auto industry.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), overall sales of commercial vehicles were down 38.71 percent to 51,897 units in August as compared with 84,668 units in August 2018.

In August, commercial vehicle manufacturers curtailed production at their plants by 42.05 percent to 54,873 units as compared with 94,698 units in August 2018, SIAM said.

In September, the government slashed the effective corporate tax to 25.17 percent, inclusive of all cess and surcharges for domestic companies. Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal, which began on 1 April.

“The reduction of the corporate tax to 15 percent for new companies making fresh investments from 1 October 2019, will support investment and also FDI in the auto sector. This is expected to give a big boost to Make in India for the automobile industry,” the Society of Indian Automobile Manufacturers (SIAM) President, Rajan Wadhera, said in a statement.

Slump in auto sector

The auto industry has been going through a prolonged slump. Total vehicle sales in India witnessed the steepest fall in August since industry body SIAM started recording wholesale vehicle sales data in 1997-98. Overall vehicle sales in the month stood at 18,21,490 units as against 23,82,436 units in August 2018, a fall of 23.55 percent.

The onset of the festive season in September also failed to lift passenger vehicle (PV) sales with major automobile makers, including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Toyota and Honda, reporting double-digit declines in their respective PV sales.

The Indian auto industry is facing a big structural issue with affordability becoming one of the most serious challenges due to several factors, including headwinds created by government policies, according to Toyota Kirloskar Motor Vice-Chairman Vikram Kirloskar.

With the transition from BS-IV emission norms to BS-VI due in April 2020, he said vehicle prices will go up further, thereby affecting affordability as a percentage of EMIs of a consumer's salary will rise. "It is a big structural issue that we will have to go through...Affordability is the real problem," Kirloskar told PTI when asked how the recent steps taken by the government to boost the auto industry have helped. "When demand in the auto sector (is low), people are not buying cars how much can the government do?"

--With PTI inputs

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Updated Date: Oct 08, 2019 14:54:57 IST