Monday, July 04, 2011
By Pranjal Gera
Punch to Maruti Suzuki: Fold up in maintenance following strike
A planned fold up in the maintenance department following the strike at the Manesar plant this month, is anticipated to plunge the production at Maruti Suzuki to a two-year low. A close source in New Delhi informed to media.
Over half of the cars in the country are produced by Maruti. In June Maruti was expected to produce 60,000-65,000 cars, adjacent to the monthly average of 100,000 units it manufactures at its 4 plants. In June 2010, Maruti Suzuki dispatched 72,812 cars.
The 13 day strike at its Manesar plant previously this month in lieu of recognition of a new union for workers brought a loss of Rs. 630 crores with a downfall of an approximate of 13,500 cars’ production. This has further elongated the waiting phase for its popular cars like Maruti Swift, Maruti A-star, Maruti Swift Dzire and Maruti SX4 Sedans.
Industry executives alleged that the output plummeted by another 25,000 units due to the weeklong fold up in the maintenance department. Though, this can be compensated by a weak domestic market. In the last 2 years, car sales growth perched at near 30% and in the first 2 months of the current fiscal, car sales were 11%. This was due to hike in petrol prices and car loans which kept possible customers far away. Maruti Suzuki did not react to the probe of ET’s email on its production concern.
A Delhi based dealer held that although the demand has been slothful and the slower delivery of cars has not brunt their catalogue distantly. Largely, the attitude of the weak consumer has not affected the car sales, but only for the models like Maruti Swift and Maruti Dzire.
The domestic sales of Maruti in May were positive by 4% at 93,519 units. Mahantesh Sabarad,senior Vice-President (equity research) at Mumbai-based fortune equity brokers alleged that production loss could be covered by keeping extra shifts at plants. There will be no key blow on sales of cars due to a plunge in production.
He said that there will be no major impact on exports while there is a slump in demand from Europe. Although a blow can only be felt if the customer is tired of waiting and shifts his attention to other brands of cars available in the market. In April-May, Maruti’s exports plummeted to 18%, i.e to 20,565 cars.