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Car makers cut output due to dip in demand

Published On Nov 23, 2011 03:10 PM By Vidyadhar for Maruti Kizashi

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The country is undergoing the worst slowdown ever. The sluggish car market has not spared any car manufacturers. Be it global or domestic, all are facing the wrath alike beginning with Volkswagen, Maruti India, Hyundai India, General Motors, Fiat India and Honda Motors. Discouraged by the situation, the auto giants have decided to cut down the production of their models without leading to further apprehension. Up to 25% cut in production has been announced by various car manufacturers passing on the loss to the component suppliers as well. Hyundai India has however taken up another strategy to combat the mounting inventory at the production units.

Car makers cut output due to dip in demand

In fact they are aggressively ramping up their production to meet their export needs. What more, according to Arvind Saxena of Hyundai India, they are finding this new concept quite thrilling congratulating themselves to having found an ideal solution to overcome the dire situation. Hyundai India is always known to handle the market conditions quite positively, which now exports their car models to around 120 countries. On the other hand, Maruti India has accepted the defeat hands down giving in to the situation. Being an early bird to adapt to the forthcoming situation, Maruti Suzuki India, which is mostly into petrol cars has cut down the petrol car production since August. Maruti Alto, Maruti Wagon R are few cars which are offered only in all-petrol variants. Leading car manufacturer of the country has reported a production cut of 10%, which has faced unusually unfavourable conditions of late. The economic slowdown, sluggish car market and the recurring strikes at the plant worked adversely more than what they have bargained for.

The company sales report for the first seven months during this fiscal hasn’t been really encouraging with slaes dropping by 18%, when only fiscal 2010-2011 has recorded 24% growth for the company. However, the auto major doesn’t need to blame itself over the matter. The car industry is as it is under the clutches of sluggish car market, the worst hit in the past three years, while the last festival season during October last year the auto industry witnessed an overwhelming growth of 38%. Surprisingly, this festival season hasn’t worked any miracles and remained flat forcing the SIAM to revise their sales forecast from 10-12% to 3-4% fearing more negative conditions. As it is known, it is the petrol line-up that usually gets affected by the slowdown. Due to the low running costs of the diesel cars, they continue to sell as hotcakes in the industry. General Motors has also reportedly cut down the production of Chevrolet Spark and the petrol variant of Beat and Aveo U-VA hatchbacks.

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