Comments
Maruti Suzuki could miss the festive season sales bonanza this year, with the violence at its Manesar facility expected to lead to an almost month-long halt in production.
The festive season usually leads to a 20-25 per cent sales jump for carmakers. It typically starts by late September, continues with the ‘Navratras’ and ends with Diwali (usually in end-October or November). Buyers prefer timing their purchases to this period, as it is believed to be auspicious.
Cars made at the 5.5 lakh unit a year capacity Manesar plant — the Swift, Dzire, SX4 and A-Star — accounted for almost 40 per cent of sales between April and June this year. So, no supply of these will cause a significant dent on Maruti’s sales. The estimated revenue loss on a month of production halt is around Rs 2,700 crore.
Though the Swift was also made previously at Maruti’s Gurgaon facility which is currently operational, production there will stop as welded car bodies are only made at Manesar.
Competitors’ Gain
“With the Swift and Dzire in short supply, models that compete will definitely stand to gain,” Mr P. Balendran, Vice-President at General Motors, said.
Hyundai, Toyota, General Motors and Tata Motors may also gain market share at the cost of Maruti. Cars competing with the Swift include Ford Figo, Hyundai i20, Nissan Micra, Volkswagen Polo, while the Dzire is pitted against Toyota Etios, Mahindra Verito and Nissan Sunny.
With the car market subdued for most of the year, companies are eagerly awaiting the festive season demand. But, with Maruti accounting for 40 per cent of the total 6.60 lakh passenger vehicle sales in April-June this year, the whole market may be pulled into the red.
Mr Abdul Majeed, auto practice leader at PwC India, said Maruti should be working on a back-up plan. “They (Maruti) have a leeway if they sort their problems in a week or 10 days, then they can minimise losses. Buyers may wait for a month or two, but not 4-6 months,” he said. The month-long production halt could increase waiting period (especially diesel variants) on the Swift to almost five months from three, and for the Dzire to over six months from five.
Gurgaon Facility
Cars such as the Ertiga and Alto, both made at the 9-lakh unit a year capacity in the Gurgaon plant, may emerge saviours in some respects. Other cars made at Gurgaon are: Maruti 800, Eeco, Omni van, Gypsy, Estilo and WagonR.
However, the challenge is that apart from the Ertiga, all these cars are petrol-driven and, the current demand trend is mostly for diesel models.
A Maruti official said Navratra bookings had already started. “We will try to put the plant on track soon. Festival season or not, we will still lose production in that period. There is demand waiting to be fulfilled, which we can’t match,” he said.
Last year, too, Maruti had lost production of 83,000 units and multiple crores in revenues on a 33-day worker strike at Manesar.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.