The Hindu Business Line : Slowdown in sales raises Maruti’s component stock level

New Delhi, Sept. 4 Low retail sales due to a sluggish market scenario compelled Maruti Suzuki to halt its production for four extra days last month. The company attributed the two-day shut down to making adjustment in supplies.

At the same time, it said that it had scaled up production of its Swift and newly launched entry level sedan Dzire to meet growing demand. Dzire has a waiting period of six to eight months, despite car sales shadowed by high interest rates and inflation.

Sources in the company’s supply and production chain say that August was the first month when the plant remained shut without prior notice. They said that the slowdown in car sales has raised the stock level of components at its assembly line, forcing a production stoppage.

“August has been the worst month so far. This is the first time when the company did not procure orders according to schedule and we were informed at a very short notice,” vendor sources said. “In July too, production was closed for two extra days, but we were told in advance,” a vendor said.

Adjusting holidays

Maruti spokesperson said, “Production was put on halt at the Gurgaon plant for two days to make adjustment in supplies. The other two days was adjustment of holidays, a part of our employee incentive programme which entitles us to earn nine days of leave in a year, for working fifteen minutes extra, daily.”

“During the month, we scaled-up production of the Swift and Swift DZire to meet the growing demand,” he said.

Industry officials say that unlike other companies who would adjust their supplies by producing less, Maruti follows the strategy of either operating at full capacity or not producing at all, thereby managing its cost of production efficiently.

contrary trend

Last month, Maruti recorded a 10 per cent fall in sales, while for Honda it was around 20 per cent. “Usually, August sales start picking up because of the beginning of the festive season in the South. But last month, there has been a contrary trend with retail sales much lower than even July figures,” said Mr Rajan Pental, Senior Vice-President, Auto Loans, HDFC Bank.