Thursday, September 22, 2011
By Pranjal Gera
Car companies cutting production this festive season
The slowing market in India, has forced car companies to cut productions during the festive season. The rising interest rates and increasing petrol prices have forced car compnies to limit their productions for the first time in about ten years. The top automobile companies like Maruti Suzuki, Hyundai and Tata have decided to cut production of their cars.
September-October saw a 30% rise in sales last year. But this year the sales are dropping at a constant rate and it has made the companies scale down production, as produced cars are already piling up.
Maruti Suzuki, which is already facing problems in production due to the ongoing strike at its Manesar plant, has still decided to cut production of some of its models. The cut is estimated to be around 15-20 percent. The festival season, which generally enjoys 20-30 percent growth in sales of cars, is not picking up this time. The reason is obviously the recently increased petrol prices and RBI's decision to raise lending rates, which would thus result in interest rates for buyers of cars.
Maruti Suzuki is facing a huge pile up of most of its cars, as the demands have gone down. Though, The new Maruti Suzuki Swift booking numbers crossed the 100,000 mark, but the company has not been able to continue proper production that has made the situation worse for Maruti Suzuki.
However, the sales of diesel cars is still on the rise, as the gap in the prices of petrol and diesel has widened to about Rs. 25 per litre. The overall sales have gone down about 40% during the past few days. the growth rate is now falling in the range of -3 percent to +3 percent.