Slowdown blues: Maruti cuts production for 7th straight month in August; passenger car sales down 42%

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.

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The company produced a total of 1,11,370 units in August as against 1,68,725 units in the year-ago month, Maruti Suzuki India (MSI) said in a filing to the BSE on Monday.

Passenger vehicles' production last month stood at 1,10,214 units as against 1,66,161 units in August 2018, it added.

Production of mini and compact segment cars including Alto, New WagonR, Celerio, Ignis, Swift, Baleno and Dzire stood at 80,909 units as against 1,22,824 units in August last year, down 34.1 percent.

Representational image. Reuters.

Production of utility vehicles such as Vitara Brezza, Ertiga and S-Cross declined 34.85 percent to 15,099 units as compared with 23,176 units in the year-ago month.

Mid-sized sedan Ciaz saw its production reduced to 2,285 units in August from 6,149 units in the same month last year.

Light commercial vehicle Super Carry's production was also trimmed to 1,156 units last month from 2,564 units in August 2018, the filing said.

In July, the automaker had cut its production by 25.15 percent at 1,33,625 units.

Analyst IHS Markit has slashed its 2019 growth forecast for India and expects car sales to fall by 11 percent for the year, according to Reuters.

“It is not just lack of buyer interest but a loop of negative sentiment with automakers cutting jobs and production,”said Puneet Gupta, associate director at IHS Markit, noting that his initial forecast for 2019 had been growth in sales of 5 percent.

Maruti looking at CNG options

The company is looking at CNG option to fill in the space vacated by small diesel engine cars in future, a senior company official told PTI late last month.

The company had in April this year announced that it would stop selling diesel cars from April 2020, when BS-VI is implemented in the domestic market, citing feasibility issues after cost escalation due to the new emission norms.

At the time of the announcement around 23 percent of all the units sold by the company in the domestic market were diesel cars.

Presently, MSI offers its popular models Alto, AltoK10, Celerio, WagonR, Dzire, Ertiga in CNG option along with light commercial vehicle, Super Carry.

“All small cars in our portfolio will get converted to CNG,” Maruti Suzuki chairman RC Bhargava told The Economic Times. “There is an acceptance from the government that CNG is a cleaner fuel, and it is being accepted for transportation,” Bhargava said.

"For Maruti Suzuki in the future, CNG vehicles are likely to make up for the space vacated by small diesel engine cars," MIS Senior Executive Director (Engineering) CV Raman told PTI earlier.

The auto industry employes over 3.5 crore people directly and indirectly. Representatives of major automobile manufacturers have urged Finance Minister Nirmala Sitharaman and sought lowering of Goods and Services Taxes Tax (GST) from 28 percent to 18 percent. She said in Chennai on Sunday that the GST Council will take a call on the issue.

--With PTI inputs