Auto Sector Slowdown Hits Tata, Mahindra as Companies Announces Production Cuts

The auto industry in India is going through an extended period of slowdown in sales and the immediate future of the industry also does not look that bright. After Honda and Maruti scaled down their production to prevent inventory pile-up the latest companies to join the crowd are Tata and Mahindra. The two Indian carmakers have announced sharp cutdown in production in order to reduce the massive stock that has already been piled-up at their dealerships. Indian UV maker Mahindra recently announced that it will halt the car and SUV production at its various factories in the entire country for around 8-14 days. Here’s what the automaker said in its latest regulatory filing,

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,

As far as Tata Motors is concerned, the maker is going for a production cut in its passenger as well as commercial vehicle factories. The Pimpri (near Pune) factory of Tata in Maharashtra that produces passenger cars and Jamshedpur factory in Jharkhand responsible for making commercial vehicles will face the closure of a block owing to declining sales in the market. The company will also halt production for 3 days at the Jaguar-Land Rover factory that it runs at Chikhali, off Pune. Tata recently released a statement that reads,

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.

Several makers are also taking similar measures. A small ray of hope for the makers could be the good monsoon rainfall in the past week as the rise in rainfall will push harvest in rural areas. This is generally an indicator of a good buying spree for Indian public around the festive season. What is also to be kept in mind that given the nation faces a deficient monsoon this year as well, not only the auto industry but allied industries too will be looking at massive loss of jobs this year.