M&M joins others in cutting output

Says will observe no production days at Chakan plant to cut output

Sports utility vehicle (SUV) market leader Mahindra & Mahindra (M&M) has decided to stop production on some days this month at its automotive plants as demand for new vehicles continues to remain sluggish. The company said it and subsidiary Mahindra Vehicle Manufacturers would observe no production days ranging from one to eight days during the remaining period of this month. A senior executive of the company however, maintained inventory was normal and there were no discounts offered directly by it on its models.

Pravin Shah, chief executive (automotive division), M&M, said, “June had been bad and in July, there is absence of any government relief. There is no problem with the inventory at present. The shutdown is done to prevent any build up of inventory in the future.”

While the Mumbai-based company raised prices by 0.5 per cent earlier this month across product lines (except XUV500 and SsangYong Rexton), it confirmed there are no direct discounts being given on any of its products. Dealers of not just M&M but most other brands are forced to offer discounts to clear stock even as footfalls in showrooms have reduced to alarming levels.

“Mahindra does not do discounting. There are various schemes run of models but those are not by the company directly,” added Shah.

The company makes personal vehicles and commercial vehicles at Chakan, Kandivali and Nashik in Maharashtra, Haridwar in Uttarakhand and Zaheerabad in Andhra Pradesh. Besides, it has an engine-making plant in Igatpuri, Maharashtra.

“The management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements,” M&M said in a release sent to the Bombay Stock Exchange.

Domestic sales of utility vehicles and cars of M&M dipped by 13 per cent in June to 17,232 units as against 19,792 units. Total sales of the company excluding tractors fell by seven per cent to 36,207 units as compared to 38,951 units during the two comparable months, according to data provided by Society of Indian Automobile Manufacturers.

An additional excise duty of  three percentage points slapped on SUVs during the last budget has impacted sales of the company. From 27 per cent earlier, the tax increased to 30 per cent, impacting models such as XUV500, Scorpio, Xylo and Bolero.

Last month, Maruti Suzuki, India's largest car maker, cut production by 25 per cent as demand slowed down. This month, the company asked 200 people from the Suzuki Powertrain India unit to go on an indefinite leave in an effort to align production of diesel engines in line with market demand.

Earlier in the year, Tata Motors had cut production at its Jamshedpur plant where it makes heavy trucks. Output had halved at the company's decades-old plant. The Sanand plant in Gujarat is facing pressure after demand for the Nano nose-dived.