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Economy In Tailspin: Not Just Maruti, Hero Moto, Honda & Royal Enfield Also Slashing Production

While Maruti has announced cutting down production by 26.8%, the two-wheeler companies are slashing production by 15%.

After reports of Maruti Suzuki India slashing car production by 26.8 per cent, it has been reported that two-wheeler manufacturers have also decided to cut down production.

As per Pritish Raj’s story in the Financial Express, major manufacturers like Hero MotoCorp, Honda Motorcycle and Scooter India (HMSI) and Royal Enfield have decided to cut back their monthly production by around 15 per cent from the current month till May.

The report says that two-wheeler dealers are saddled with inventory of 80-90 days against the normal level of 20-30 days. Nikunj Sanghi, director, international affairs at the Federation of Automobile Dealers Association, said it had been communicated to the manufacturers that inventories had reached alarming levels and they expected them to recalibrate their production over the next few months.

The report added that sales have been sluggish since September during the current fiscal, leading to a growth of a mere 6.95 per cent between April-February. This, against last year’s 14 per cent growth in the same period, is worrying.

Mayank Pareek, president, PV business unit at Tata Motors, told Financial Express that production plans every month are aligned with market demand and that this is a common phenomenon in the auto industry, what is worth noting is that for several companies, production has been on the downside since December.

Production at Hero MotoCorp, for example, has been on the downside since December, falling 13.54 per cent year-on-year in January. The report also said that HMSI had cut down production in December as inventory went up to over 60 days. “Unlike nearly four lakh units produced every month, the company manufactured only 2.48 lakh units,” it said, adding that in January and February, output fell 12.64 per cent year-on-year and 14.93 per cent year-on-year, respectively. HMSI’s monthly production in March is expected to see a 15 per cent cut.

The companies Financial Express reached out to have declined to comment on the development.

In the case of four-wheelers, a Business Standard report had noted that a combination of factors— including tightening credit norms by financiers after the Infrastructure Leasing & Financial Services (IL&FS) crisis, higher ownership costs, slower economic growth, and a volatile stock market— have contributed to sluggish sales.

Also read: ‘Sales Are Falling Month After Month’: Maruti Slashes Car Production By 26.8%

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