Economic slowdown and consequent fall in demand for cars have landed car companies is a situation where they have to ask contract workers to go on leave to adjust to low demand. Maruti Suzuki is understood to have asked 200 contract workers to go on indefinite leave following cut in diesel engine production at its Manesar plant after low demand.
With increase in prices of diesel demand for diesel cars has gone down and the company has, sources say, shut the third shift at its diesel engine plant at Manesar to factor in the low demand. The Manesar plant has an annual capacity of 3,00,000 units .
Maruti Suzuki had reported 12.6 per cent decline in total sales in June at 84,455 units. During the month, its domestic sales declined 7.8 per cent at 77,002 units.
When contacted a company spokesperson said: “The diesel plant was operating at full capacity. With the continued slowdown in demand, some adjustments have been made at the diesel plant.”
MSI exports last month were down by 43 per cent to 7,453 units, from 13,066 units in the year-ago period. In June, to adjust production according to the demand, the company had shut its two plants in Gurgaon and Manesar for a day, which was followed by a 6-day scheduled maintenance closure during the month.
MSI has been trying to bounce back after last year’s violence at the Manesar plant in which a senior company official was killed. It had locked-out the plant for a month following the incident in July and it had fired at least 500 permanent workers.
Car sales in India appear to be heading for a record 8th consecutive month of decline with major firms including MSI, Tata Motors, Toyota and General Motors reporting drop in June as economic slowdown and low consumer sentiments continue to affect demand. The overall official sales figures for June are yet to be released by auto industry body SIAM.
The sales had fallen for a record 7th consecutive month in May with a decline of 12.26 per cent at 1,43,216 units as against 1,63,222 units in the same month of 2012.
In a filing to the BSE, Maruti Suzuki India (MSI) said it had cut the production of its various car models by 25.36 per cent to 61,668 units last month as compared to 82,626 units in June last year.
Production of the company’s mini segment cars, including A-Star, Alto and WagonR, was reduced by 12.27 per cent to 28,227 units from 32,176 units in the year ago period.
Similarly, in the compact segment (comprising the Estilo, Swift and Ritz models), MSI reduced the production by 46.36 per cent to 12,365 units as compared to 23,053 units in the same period of June 2012.
The company reduced the production of other car models including DZiRE, SX4 by 21.11 per cent to 12,286 units, as compared to 15,575 units produced in June 2012.