While the festive season had already slowed down auto sales for almost all major car makers, it has been more so for the small car Tata Nano.
The 'lower than normal demand through the festival period for vehicles in India' has resulted in Tata Motors utilising only 25 per cent of its 250,000 Nano cars manufacturing capacity at its Sanand plant.
Resultantly, the company has also modified its working hours to align production with demand, according to a spokesperson from Tata Motors.
"Modification of our working hours is in line with our plan to align production with demand. Also, in view of the end of calendar year, our endeavor is to minimise the stock of cars produced during CY '12 at the beginning of CY '13, and make CY '13 produced cars available to our customers," the spokesperson said in an emailed response, adding that the current manufacturing capacity is 250,000, and we have been utilising it at a level of around 25 per cent.
What's more, the reduction in capacity utilisation at the Nano plant has also had its ripple effect on few suppliers in the Vendor Park.
For instance, Since November, apart from doing away with the second shift, Rajkot-based Amul Industries has also laid off 75 or 30 per cent of its total 250 work force at its Sanand plant that manufactures crankshafts and connecting rods.
"Since November, we have not only been running the Sanand plant on a single shift but also laid off few workers. We had to cut down on several overhead costs as well due to decline in orders from Tata Motors' Nano plant," said Suresh Santoki, managing director, Amul Industries, which is currently producing only 12,000 shafts and rods per month as against an installed capacity of 40,000 per month.
When asked about an inventory of over 20,000 Nano cars believed to be lying at the Sanand plant, the company said, "Due to the lower than normal demand through the festival period for vehicles in India, our stocks are slightly higher than the planned one month. Hence is the modification to working hours to manage as per normal business."
Another vendor which had set a facility in the Vendor Park, Bhavani Industry has also been running one shift instead of the regular three shifts since October this year.
"We have an installed capacity of 100,000 gear box parts per annum but we are utilising only 20 per cent of it due to reduction in orders from the Nano plant. However, we are hoping for the car market to improve in the coming months that will boost Nano sales and thereby help improve our production," said Himanshu Nandasana, managing director, Bhavani Industry.
Even in the month of November, in the midst of Diwali festive season, sales of the Tata Nano were around 3,503 cars, as against compared to 6,401 units sold in November last year.
"We are in a wait-and-watch mode. It doesn't make sense to run the Sanand plant for such a low supply order. Hence, we are currently supplying the same from the Pune plant," said a company official on condition of anonymity.
Meanwhile, talking about total sales, the spokesperson said that in 2012-13 thus far, Tata Motors has sold, as at the end of November, 47130 cars while the sales were 74527 in 2011-12, 70432 in 2010-11 and 30350 in 2009-10.
However, reiterating the views of the company's outgoing Chairman, Rata Tata, the spokesperson added, "The product plan for the Nano continues to evolve. New engine variants are one example of that planned for 2013."