Maruti Suzuki likely to implement single shift at company's all plants amid fall in car demand

In the wake of a persistent slump in the demand for vehicles, country’s leading car maker Maruti Suzuki has reportedly decided to implement a single shift in all the plants of the company including Manesar indicating a production cut, said media reports. Maruti Suzuki is expected to introduce one shift even at its Manesar plant in addition to Gurugram and Gujarat facilities which are operating below capacity, reported The Economic Times quoting people aware of the development. With country’s largest carmaker planning to move to single shift system to reduce production as a result of low demand, it also hints at hundreds of job losses in the company’s different plants, the report said quoting sources. [caption id=“attachment_3659415” align=“alignleft” width=“380”] Representational image. Reuters[/caption] Maruti Suzuki said headwinds like softening of demand in the domestic market and protectionist measures abroad may impact its ability to create value in the short-term. With the prolonged slowdown, the market leader has been forced to take various steps, including production cuts at its manufacturing plants, in order to adjust its inventory to market demand. It had cut vehicle production for the fifth consecutive month in June by 15.6 percent to 1,11,917 units as compared to 1,32,616 units in the year-ago month. As per industry sources, the company has also reduced temporary manpower at its facilities and froze new hiring until the slowdown continues. The company, which has over 50 percent market share in the domestic passenger vehicle industry, has been impacted by sluggish offtake and has seen total sales drop of 33.5 percent in July at 1,09,264 units. The company had sold 1,64,369 in July last year, Maruti Suzuki said in a statement. Domestic sales declined by 36.3 percent at 98,210 units last month as against 1,54,150 units in the year ago month, it added. Sales of mini cars comprising Alto and WagonR were at 11,577 units as compared to 37,710 units in July last year, down 69.3 percent. On 26 July, Maruti Suzuki had reported 31.67 percent decline in consolidated net profit at Rs 1,376.8 crore for the first quarter ended 30 June, on account of lower sales volume and higher depreciation expenses. The company, which posted a net profit of Rs 2,015.1 crore in April-June period 2018-19, said in the next three years it will completely shift to paying a royalty to parent Suzuki Motor Corp in rupees instead of yen. — With PTI inputs