We always come across the news that the Indian automobile industry is growing day by day. No doubt there have been developments and we are on our road to progress but there are certain times where we have to face downsides in the business. This quarter of the year 2019 has brought a really dark phase to the automotive sales in India. Auto manufacturers have been continuously freezing production in the last few months.
The sale figures have been very disappointing in the past few months such that the scenario has forced the plants to slam production. Yes! You read it right. Major Indian auto manufacturers have decided to shut the plants and freeze the production due to the huge amount of unsold inventory. The latest census says that at the start of June 2019, about half a million passenger vehicles having a worth of around $5 Billion(Rs.35k Cr) are lying unsold in company dealerships. For the two-wheeler segment, the figure comes out to be 3 Million units which amount to $2.5 Billion (Rs.17k Cr).
Therefore the plants have decided to observe no-production days for a decided period of time which is varying for different brands. For instance, The Tata Motors’ Sanand plant didn’t produce any vehicle from May 27 to June 3. Production in Honda Cars India was shut down from June 5 to June 8. Skoda and Nissan also plan a shutdown during June 2019 for scheduled maintenance.
After Maruti Suzuki halting production, the latest plant to opt the same is Mahindra. 13 days will be observed as no-production days. Mahindra had a huge number of unsold vehicles in the month of April and May and therefore has decided to pause the production in order to reduce the industry output by almost 20-25%. The dealers have to pay GST on the unsold inventory they are holding which proves to be an unnecessary burden on them.
The upcoming safety norms and emission norms are the reasons behind this drop in the sales of the various Indian cars. The Indian audience awaits the new norms and has possibly decided not to purchase in order to avoid any future problems.The crash norms are expected to be updated and who doesn’t know about BSVI!
These are the main reasons behind Maruti Suzuki halting production and other manufacturers like Mahindra, Honda also opting for the same.
October 2019 will come up with new crash test norms and the BSVI comes into action from 2020.
This lower sales number can be advantageous to the customers because the automakers may possibly offer huge discounts as they want to get rid of this unsold inventory anyway. Freezing the production has been beneficial to the customers in terms of offers. Let’s hope these plants get back to work really soon and come up with exciting offers for the customers.
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