MUMBAI: Some automobile manufacturers who had increased supply to
dealerships to meet a temporary rise in demand during the festive season
are now adapting production to the grim reality of slackened demand
post the festival season by opting for 'block closures' in November.
Much of Pune's automotive cluster will remain shut till November 9, and
in some cases till November 11, say industry officials. The companies
opting for a prolonged November shutdown include Mahindra &
Mahindra, Tata Motors,
General Motors
India and Volkswagen India. The manufacturers have extended their
traditional Diwali holidays of 2-3 days (November 1-3) to a week to
bring inventory in line with demand; some companies have scheduled a
maintenance shutdown.
Several vendors catering to the four
automakers say production plans for November assume output which is 10%
to 50% lower across various models. "Due to the weak demand, M&M and
Tata MotorsBSE 1.74 %
have produced 10%-15% less than they had planned for October. For the
month of November, the first 10 days of the month are holidays, so
effectively the production has come down by 25%-40% over the last few
months," a vendor said, requesting anonymity.
Without denying
or confirming the development, the Tata Motors spokesperson said: "At
Tata Motors, our production plans are continuously calibrated keeping in
mind estimated demand, and our stock in the channel and in our
stockyards. New vehicle demand is subdued due to poor load availability,
increasing operating expenses and commensurate freight rates, which is a
reflection of the state of the Indian economy."
Toyota
Kirloskar, the maker of Innova and Corolla, has already announced the
company would be moving to a single shift in November. Pravin Shah,
chief executive, automotive, Mahindra & Mahindra says the 'no
production days' in the next week is part of the company's annual
maintenance shutdown plan. "This was planned right at the start of the
year in co-ordination with our workers' union. It has got nothing to do
with the demand environment, and our sales in October have grown over
September. And generally during Diwali, the level of absenteeism is
more, so it makes business sense to not produce when the attendance is
low," Shah said. The
Volkswagen India
spokesperson, too, claimed the maintenance shutdown was planned and the
company was on course to meet internal production target for the end of
December.
P Balendran, vice-president, General Motors India,
confirmed that the Talegaon plant is closed for five days next week and
the Halol plant for three days on account of Diwali Holidays.
"Normally, we observe a three-day holiday during Diwali with some
adjusted off-days having worked on Sundays/other holidays. This year, in
the case of the Talegaon plant, it has been extended by two more days
as we had combined maintenance shutdown for the plant together with the
Diwali holidays," Balendran said.
Traditionally, the automotive
industry shuts down for maintenance twice a year. The first shutdown is
generally in June or July and the second takes place in the last week
of December, as companies try to prune inventories at the year-end. But
weak demand may have forced these automakers to advance the shutdown.
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