With India’s car market showing signs of a slowdown due to weak demand the country’s largest car maker, Maruti Suzuki, a unit of Japan’s Suzuki Motor Corporation, has trimmed its production over the past few months.
In April it slashed its vehicle production by around 10% across its factories, compared with April 2018. This is the company’s third consecutive month of production cut this year. In March, it had resorted to a production cut of 20.9% across its factories and in February, it had reduced production by over 8%, compared with corresponding months last year, Financial Express reports.
In April this year, the company produced a total of 147,669 units, down 9.6% from 163,368 units a year ago. The company reduced the production of passenger vehicles, including the Alto, Swift and Dzire, by 10.3% to 144,702 units compared with 161,370 units in April 2018. The company last month reduced the production of all other segments, except for utility vehicle but including its big selling compact and mini segments.
Maruti Suzuki’s installed manufacturing capacity at its two plants in Gurgaon and Manesar stands at 1.55 million units per annum. Besides, the Suzuki-owned Hansalpur (Gujarat) plant also has an installed capacity of 250,000 units from the first line. It has a market share above 50%.
Several other carmakers, including Tata Motors and Toyota, have been adjusting production amid weak demand since December 2018. A slowdown in consumption coupled with other factors such as a rise in insurance costs and a liquidity crunch in the banking sector left car makers with lots full of unsold vehicles.
A fortnight ago Maruti Suzuki issued its weakest growth forecast in the past five years, citing falling demand. It expects production and sales to grow between 4% and 8% for the financial year starting in April. Last year, the company targeted 10% sales growth, but later scaled it down to 8%.
The company admitted that the country’s overall car market had been affected due to a slowdown in both the rural and urban markets. It also plans to phase out all diesel vehicles. Diesel currently comprises nearly one-fourth of its product portfolio. The impact of this move on the firm’s sales will be substantial.
Auto scrip down
On the Bombay Stock Exchange, the S&P BSE Auto Sector Index was the worst performer this year among 19 other indexes. It fell nearly 30% after reaching a record in December 2017. Maruti Suzuki’s scrip was among the worst auto company performers this year.