Manesar plant unrest expires, September sales severely hit

Friday 07 October 2011, 18:10 PM by

After a month-long labour unrest, Maruti Suzuki workers' strike at its production plant in Manesar finally ended on 1st October, when the factory workers complied with the demand of the company to sign a 'good conduct bond'. The unbidden situation first surfaced during the beginning of September, when 7,000 factory workers went on strike and joined the already protesting workers at the Maruti Suzuki plant. The rift between the workers and management widened as the workers refused to sign a 'discipline agreement'. The situation worsened as the company officials were compelled to terminate 57 workers from the production plant.

The unprecedented labour unrest cost Maruti Suzuki about $135 million. The company has reportedly suffered a sales dip of 21% in September as compared to the sales figures of last year. The official statement reported that the company sold-off a total of just 85,565 vehicles during September, which is a major drop from 1,08,006 vehicles sold in the same month last year.

Manesar plant unrest expires,  September sales severely hit |

Furthermore, the company stated in the press release, dated 1st October 2011, that, “The disruption in production owing to the labour issue at the Company's Manesar plant during September adversely impacted the sales numbers during the month. The Swift, SX4 and A-star are manufactured at the Manesar plant.” Owing to the workers strike, company's production capacity of Swift, SX4 and A-Star was gravely affected, which is evident through the vehicles' sales drop.

The September sales figures of Maruti Swift, Estilo and Ritz have dropped by 9.3%, to only 19,722 vehicle sales, from 21,749 vehicle sales in September 2010. Maruti SX4 sales was the most hit, with merely 196 SX4s being sold in September 2011, a downfall of 90%, from 1,965 vehicles sales last year.

While the labour strike at Maruti Suzuki was making things worse for the company's market standing, car users changing their preferences and buying cars from other companies, exacerbated the situation. The change in consumer demand brought about a comparatively positive change in the sales figures of car makers like Ford, Hyundai and Tata. Moreover, with the Indian market gearing up to enter the sale-boosting festive month of October, most auto companies are expected to take utmost advantage.

However, Maruti Suzuki, India's leading car maker, seems to recuperate, with the strike coming to an end, and can now focus on the October sales figures. Workers at the Manesar plant have agreed to sign the 'good conduct bond', however, the company has no intentions of remunerating the workers for the strike period. The company has also revealed that it is continuously hiring new workers.

Indian automobile industry sales have been continuously decrementing since July this year. Moreover, high interest rates and fuel prices have slowed down car sales in India. Maruti Suzuki has experienced the worst outcome, especially during the month of August and September.

Thus, now that the conditions have improved in terms of production, the Maruti will have to speed up to stay abreast of the anticipated increase in the consumer demand this October.

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