Maruti Suzuki cuts car production by nearly 21 %

Maruti Suzuki has cut car production in a big way, and has revealed this through regulatory filings. In March 2019,  Maruti produced 1.36 lakh cars in India, which is nearly 21 % lower than March 2018 production figures – 1.71 lakh  units. The automaker has cited lower demand for the cut in production. Car makers across the board are facing a sales slump in the Indian market. The slowdown in sales reflects a weakening economy. For car sales to improve, economic momentum is required, and that’s likely to take at least a year to happen given the fact that General Elections are scheduled in India for May 2019. The new government is likely to take multiple steps in order to boost the economy.

Currently, Maruti has an installed capacity to build 18 lakh cars each year. Of this capacity, Manesar and Gurgaon  factories contribute to 15.5 lakhs units while the recently set up factory at Hansalpur, Gujarat accounts for 2.5  lakh units. Maruti Suzuki has another factory coming up at Sanand, which will add 2.5 lakh more cars to the overall  capacity. While Maruti Suzuki sells bulk of its cars in India, the automaker also exports a sizeable chunk of its  production to countries around the world. As India is seeing a slowdown in car sales, expect Maruti Suzuki to ramp up exports to compensate.

Maruti Suzuki and its dealers are also offering attractive discounts on almost the entire range of cars save for the  recent launches such as the WagonR and Ertiga. These discounts are aimed at reducing inventory levels accumulated at  dealerships due to the steady sales slowdown. With the factory also reducing production, inventory levels at dealerships is likely to go down in the coming months. Other automakers such as Hyundai, Honda, Tata Motors and Mahindra could also cut production in the coming months if sales don’t pick up in a big way. For now though, these automakers have not announced any production cuts.

For now, Maruti Suzuki is focusing on revamping its entire fleet of cars with additional safety features in order to  meet the BNVSAP (Bharat New Vehicle Safety Assessment Program) norms. Maruti is also working towards meeting the April 2020 deadline for making its cars Bharat Stage 6 (BS6) emission norms compliant. By the end of this year, most cars in Maruti Suzuki’s fleet comprising of the Alto at the bottom and the S-Cross at the top, are likely to become BS6 compliant. The automaker is also expected to dump diesel engines on its smaller cars, instead opting for mild petrol hybrids, CNG and LPG options as diesel-replacements. Maruti is also working on an electric version of the WagonR, which will be launched next year.

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