Mahindra & Tata Motors to shut down production of cars & SUVs to trim inventory levels

The car market is slow and almost every automaker is facing the heat from the sales slowdown. Mahindra and Tata Motors are among the top automakers of India about to enforce a steep production cut in order to reduce piling up inventory at dealer stockyards. Mahindra has informed investors that it would shut down car and SUV production at its various factories across India for 8-14 days. Here’s what the automaker said in its latest regulatory filing,

Mahindra & Tata Motors to shut down production of cars & SUVs to trim inventory levels

The company in the auto sector, and Mahindra Vehicle Manufacturers Limited (MVML), a wholly owned subsidiary of the company, as part of aligning its production with sales requirements, would be observing ‘No Production Days’ ranging between 8-14 days in various plants of the company and MVML during the second quarter of the financial year 2019-2020,

Tata Motors has also revealed that it would effect a block closure of its Pimpri and Jamshedpur factories for 3 days in order to reduce inventory levels. While Tata Motors’ Pimpri factory builds passenger cars, the one at Jamshedpur builds commercial vehicles. Tata Motors will also cut production for 3 days at the Jaguar-Land Rover factory that it runs at Chikhali, off Pune. The automaker said the following in a press statement,

As indicated earlier, external environment remains challenging, leading to demand contraction. We have aligned our production to actual demand and adjusted the number of shifts and contractual manpower. Eighteen days of no production in a single year is a regular norm when the plant is used for maintenance activities. At present, the three-day block closure will be used for upgrading the assembly lines, preparing for BSVI and similar jobs. Many departments are going to be operational.

Apart from Mahindra and Tata Motors, India’s largest automaker – Maruti Suzuki – has also gone on multiple zero production days in order to trim inventory levels. Other automakers including Toyota and Ford are likely to go in for similar measures. The monsoon in India has picked up dramatically over the past month, and good rainfall means better festive buying demand for car makers. If demand does not pick up in the coming months, car maker could begin laying off staff in a big way. Already, top automakers have begun cutting jobs of temporary workers. The auto parts industry (ancillaries) that supply to major car makers have also begun cutting jobs due to weak demand. The auto industry has demanded the government that it cut GST to 18 %. It remains to be seen whether the Indian government gives in to these demands to boost growth.