Maruti Suzuki India Limited, the country's largest passenger car manufacturer, has announced to shut down two of its production facilities based in Manesar and Gurgaon for eight days, starting tomorrow this month. The company is looking towards adjusting its inventory levels, following the slackening demand for vehicles in Indian passenger car market. At present, Maruti Suzuki sits high on an annual production capacity of 15 lakh units and would stop production for two days June 7 and 8 at its Manesar and Gurgaon premises. The two-day shut down would be followed by the scheduled bi-annual production closure for six days from June 17 to 22, 2013.
Maruti Suzuki India's latest decision to shut down manufacturing operations is the second for this year, since its Gurgaon unit was closed on March 9 owing to the dropping popularity and sales of its WagonR and Alto models. The June plant closure is believed to be due to the continuously dropping sales figures in the passenger car market. As per reports, Maruti Suzuki witnessed a 14 per cent drop in totals sales last month at 84,777 units. Further, domestic sales plunged by 13 per cent at 77,821 units, while the company saw a sharp 27 per cent decline in its exports to 6,856 units in May 2013.
A Maruti Suzuki spokesperson revealed that the two-day plant closure would see a loss in production around 10,000 units. The company spokesperson said, “The Gurgaon factory produces around 3,000 cars, while the rest comes from the twin plants at Manesar. While tomorrow all the plants would be closed, the company has decided to take Saturday as a scheduled holiday.”
Addressing the piling inventory issue, several automobile industry experts have affirmed that plant shut downs are part of a normal production cycle. Speaking on the same, an analyst with a Mumbai based firm, was quoted as saying, “It's a global practice to control your stock in case of sluggish market demand. Maruti has taken a prudent step to control its inventory, which has spiralled to around five weeks from the normal of three. There is no point making cars that are not getting sold.”
Reportedly, Maruti Suzuki India had assembled 11.68 lakh units during the 2012-13 fiscal, of which 10.51 lakh units were retailed in the domestic market and some 1.20 lakh units were shipped overseas. The company is also working towards its plans to commence operations from its third Manesar facility sometime around September this year. Following the start of new plant, Maruti Suzuki India's total production capacity would be increased to 17.5 lakh units from the present 15 lakh units.