With the car industry reeling from a drop in demand, India’s largest carmaker Maruti Suzuki has reduced its production for the eighth month in a row.
In a regulatory filing, the carmaker said that in September it cut production to 132,199 units for the month, compared to 160,219 units in September 2018, a decrease of about 17.5%.
Production of mini and compact segment cars, including Alto, WagonR, Celerio, Ignis, Swift, Baleno and Dzire stood at 98,337 units compared to 115,576 units in September last year, down nearly 15%.
Similarly, production of utility vehicles such as Vitara Brezza, Ertiga and S-Cross declined 17% to 18,435 units, compared to 22,226 units a year ago.
And production of mid-sized Ciaz sedans dropped to 2,350 units in September from 4,739 units in the same month last year.
In August this year, the automaker cut its overall production by 34% to 111,370 units.
Meanwhile, Tata Motors reported a 63% drop in production of passenger vehicles in September at 6,976 units, compared with 18,855 units in the same period last year.
All other major automobile makers, including Hyundai, Mahindra & Mahindra, Toyota and Honda, have reported double-digit declines in domestic passenger vehicle sales in September as the onset of the festive season failed to lift the ongoing industry slump.
Hyundai Motor India said domestic passenger vehicle sales were down nearly 15% at 40,705 units as against 47,781 units in September last year, while Mahindra & Mahindra reported a 33% decline in passenger vehicle sales at 14,333 units, compared with 21,411 units in September 2018.
Toyota Kirloskar Motor’s domestic sales totaled 10,203 units last month compared to 12,512 units in September 2018, a decline of 18%.
And Honda Cars India reported a 37% decline in domestic sales at 9,301 units in September, compared to 14,820 units in the same month last year.
All these carmakers have resorted to production cuts and laid off temporary employees.
No GST relief
Many manufacturers had pinned hopes on a prediction that the government might cut the goods and services tax (GST) for passenger vehicles during the GST Council meeting on September 20, but that did not happen. The tax rate for passenger vehicles remained at 28%. Many buyers had even deferred their purchases hoping for a cut in the tax rate.
The only relief offered to the automotive sector was a reduction in the surtax on large passenger vehicles carrying 10 to 13 people. It has been reduced from 15% over and above the goods and services tax to 1% for petrol vehicles and 3% for diesel vehicles.
Component makers hit
Ancillary units catering to these car companies have also been badly hit. They are cutting production and laying off employees as well to prevent having an inventory pile-up.
Bosch Ltd, one of the largest auto-parts makers, has trimmed production at its plants in Tamil Nadu, Karnataka and Rajasthan states. Smaller companies are the worst hit.
This sector employs close to 5 million employees and industry experts claim 100,000 jobs have already been lost and that if the current downturn continues for another three to four months it could lead to a loss of one million jobs.