Maruti Suzuki, India's largest passenger car maker, continues to be entangled in a catch-22 situation as it sold less than half the cars in October, compared to the previous year. The labour unrest claimed around $500 million due to the subsequent derailing of the production process at the plant. Moreover, a slowing demand engulfing Asia's third-largest economy deteriorated the condition further.
Maruti, 54.2 per cent of which is owned by Japan's Suzuki Motor Corp, concluded the two month long stand-off at its plant last month, however, not before losing production of around 80,000 cars. As a result, its market share took a severe beating, tumbling down to 40 per cent from over 50 per cent a year ago.
India has seen a fall in the demand of cars of late, owing to sky-scraping interest rates and increasing vehicle and fuel costs that has kept buyers at bay. As a matter of fact, India's middle class accounts for maximum car sales in the country, wherein about purchase of three quarters of new cars is supported by banks and financial institutions.
Severe sales fall was noticed in July when the auto industry saw its first monthly decline in nearly three years, and since then it is struggling to gain back the momentum, even in August and September.
The start of the unrest at the Maruti plant in Manesar coincided with the launch of the revamped model of its popular Swift and thus, the production lowered drastically during the festive season.
Maruti sold 55,595 cars in October, lowering the sales by 53.2 per cent from a year earlier. The shut down at the plant resulted in a production loss of 40,000 cars during the month, the company reported.
Close rivals such as Tata Motors and Mahindra & Mahindra were seen fishing in Maruti's troubled waters as Tata posted a 22 per cent rise in sales in September, spreading its market share to 16.4 per cent from 15 per cent last year.
Thus, Maruti Suzuki is desperately working towards taking things in its control, and the recent plan to expand in association with Gujarat appears to be an effective initiative by the company.
