Thursday, December 25, 2008

Reccession Hits Maruti Production

Faced with a steep drop of about 27 per cent in the domestic demand for passenger vehicles in November this year, the country's leading manufacturer of cars by sales, Maruti Suzuki, has effected cuts in production for December to the same extent it pruned production in November, which was over 6 per cent.
The move comes for the third consecutive month since Maruti effected a 5 per cent production cut in October this year. The cut in production reflects the company's revision of its growth projections from 10 per cent to 5 per cent for this year.

Most of the production cuts have taken place at the company's Gurgaon plant which has an annual installed capacity of 3.5 lakh units (single shift). This plant manufactures the company's compact car models like the Alto, Wagon R, and Zen. While the Mannesar plant churns out strategic models like the Swift, Dzire, and the newly-launched A-Star.

The company's bestselling models like the Swift and Dzire which early this year had a waiting period of around 60 days still continue to keep the company's production facilities at Mannesar at full capacity. However, the current waiting period has come down to about 30 days. Company officials indicated of a possibility in the future of manufacturing Swift at the Gurgaon plant. "That's an option, which has to be examined," says RC Bhargava, Chairman, Maruti Suzuki.

Company officials indicated that growth for this year would be the same but not less than the growth achieved last year. "It may be just about the same level as last year," says Bhargava.

Maruti Suzuki, which launched the A-Star in the domestic markets in November this year, will begin exports from January next year to its parent Suzuki in Japan. "We have not finalised the volume for supplying to Nissan but we expect to start supplying to them by February-March next year," Nakanishi said.

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