Maruti Suzuki slashes car production by nearly 27% on sluggish demand ahead of general elections, BS-VI emission norms

The country’s leading car manufacturer Maruti Suzuki reportedly slashed production by nearly 27 percent in March due to sluggish demand in passenger car market and tougher emission norms, which are to come into effect from next year, said a media report

Maruti Suzuki has reportedly cut its car production by 26.8 percent to about 126,000 units in March as compared to more than 172,000 units during the same period a year ago, said a report in Business Standard quoting people aware of the development.

The auto major cut the production amid uncertainties on demand in the market ahead of general elections in May this year besides shift to tougher BS-VI emission norms, which are to be implemented from 1 April, 2020, said the report.

In December last year, Maruti Suzuki reduced its sales forecast for the ongoing fiscal to 8 percent from an earlier projection of double-digit growth, a PTI report said.

The company cited low demand in the second half of the year due to high interest rates, increased insurance cost and fuel prices for its downward revision, besides its lack of new model launch in the volume segment.

Maruti Suzuki chairman RC Bhargava had then said that in preparation for transition to BS-VI emission norms, the company would stop production of majority of its BS-IV models by December 2019.

Bhargava said the company was offering attractive packages to customers to push retail sales in December to reduce dealer inventory, which coupled with a new model launch planned in January-March 2019, would help Maruti Suzuki reverse the trend of declining sales.

Earlier in 2016, the Centre had announced that India would skip the BS-V norms altogether and adopt BS-VI norms. It had stated that from 1 April, 2020, only vehicles complying with the latest emission norms would be manufactured while giving three months to automobile firms for the transition to start selling BS-VI vehicles.

However, citing air pollution issues, the Supreme Court last year said no BS-IV vehicles would be allowed to be sold across the country from 1 April, next year.

“In the wholesales, we expect sales to go up by 5 percent in January-March quarter."

In the first half of the current fiscal, the company had posted sales growth of 10.5 percent, whereas it was flat in the third quarter.

Earlier, Maruti Suzuki had reported 17.21 percent decline in net profit at Rs 1,489.3 crore for the third quarter ended 31 December, 2018.

The company had posted a net profit of Rs 1,799 crore in the same period of previous fiscal.

Total income during the October-December quarter under review stood at Rs 20,585.6 crore as against Rs 19,528.1 crore in the year-ago period.

The company sold a total of 4,28,643 vehicles during the quarter, a marginal decline of 0.6 percent, over the same period the previous year.

--With PTI inputs