Automakers hit brakes after festive boost fades
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alok agarwal
Nov 4, 2013, 1:01:26 AM11/4/13
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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.
http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/automakers-like-mm-tata-motors-opts-for-a-prolonged-november-shutdown-as-festive-boost-fades/articleshow/25195080.cms
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.
http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/automakers-like-mm-tata-motors-opts-for-a-prolonged-november-shutdown-as-festive-boost-fades/articleshow/25195080.cms
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