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Old 19th June 2012, 13:42   #16
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

If i am not mistaken, GM also has stopped manufacturing petrol beat and Spark. They are also working in single shift i guess. Fiat also must be making very minimum cars per month now. As market is low, no point in just keep making more and more cars. Manufacturer are taking right steps i guess. government should seriously look into the issue else we may face another 2008.
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Old 19th June 2012, 14:33   #17
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Nothing surprising if this is for petrol cars alone. When Maruti is cutting down the production of some of it's petrol models, this is obvious with other manufactures.
But if diesel models are also not moving, there is something serious to think about. Isn't it?
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Old 19th June 2012, 14:49   #18
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

With the current market scenario will we see all the new launches happening as per schedule. I am sure auto companies will be looking at the bigger picture and would consider sustaining their new product in the existing market.
Let's assume Renault launches the Duster next month, in the 1st few months the demand might be high due to the interest + product freshness. But then what? Am sure Renault would want to get a good no. of orders month on month. It will surely want the Duster to enjoy the same response as the XUV500, which I high doubt.

But will the other manufacturers keep their launch dates as planned? A re-think may be on the cards.
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Old 19th June 2012, 15:24   #19
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

I hope this is not a precursor to (additional) overall economic downturn (read recession).
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Old 19th June 2012, 15:45   #20
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Quote:
Originally Posted by souravc View Post
This is the real economy freezing up - Indians are getting pinched and have {sensibly} started looking at the bigger picture and away from the "diesel running cost lower" / "petrol carsbeing offered at mind boggling discounts" / "second hand petrols at throwaway prices" discussions and have started having a hard look at the EMI outgoes and (un)certainty of the expected hike and bonuses !!
As Samarjit mentioned , with CPI stubbornly at above 10 % ( real value likely to be much higher) and growth coming to a grinding halt its grim !
I feel very sad at the policy inaction , the scenario would really hurt the common man
Quite aptly described. Potential car owners have decided to pause now unless the overall outlook improves. Given that a majority of India is not that well off expecting growth at the same speed is foolish. Those who already own a car will think twice before making a second purchase. Those who are looking to upgrade or were thinking of the first car will be discouraged with the inflation and the high interest rates. I also feel there is now a certain amount of private debt overhang creeping in. India is not a credit crazy economy hence there could be a period of low growth where folks would like to pay down their debt. What beats me is even after having record agricultural production last year, India ranks top in inflation among the BRIC nations Inflation, List by Country.

If somehow the monsoons don't click this year, are we going to see consistent double digit inflation numbers? I kind of get why other nations around the world have such super low inflation numbers but I don't get why India is so totally different in a bad way. Unfunded subsidies? Rampant hoarding and corruption? Apologies for going a bit OT here.
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Old 19th June 2012, 16:00   #21
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

I thought Tata Motors was stopping only Commercial Vehicle production at Pune, as I read this article Business Line : Companies News : Tata Motors declares 3-day block closure

Looks like I was mistaken!
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Old 19th June 2012, 16:19   #22
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Quote:
Originally Posted by aniketi View Post
PS: As far as Pune is concerned, i see lot of new cars on the roads. Property prices are all time high. Looks like Pune has less impact
Less admission to this effect is not less impact
I hear from reliable sources that no one is willing to buy, be it cars or property. In terms of property, the relevant builders have some leeway till which they will not bend. But they will have to at some point when people dont buy. Then the free modular kitchen (an euphemism for their kind of freebies) will be thrown in. Over the past 3 years, real estate is growing at a diminishing rate. Probably around 12% pa.

But then there are specific areas that see less impact as you say. That is because its a sellers market in some areas (supply < demand). Perhaps similar to luxury sports car market.

This does not hold true for B/ C segment cars where volumes dictate production.

Quote:
Originally Posted by novice29 View Post
But if diesel models are also not moving, there is something serious to think about. Isn't it?
Yes, Maruti is pushing their diesel models too. Bookings for the Swift no less have been slashed overnight magically from months to days. I would like to see what happens if people still dont spend.

A little birdie tells me that 'some' bookings have been cancelled too, adding to the domino effect.

Quote:
Originally Posted by Blue Thunder View Post
I hope this is not a precursor to (additional) overall economic downturn (read recession).
Unfortunately, this does seem like it. Areas/ sections of the economy stop one by one. we all know the cycle. Today it will be the production of cars. So this means reduced income for people working there. who will then spend less elsewhere, say malls. so less footfall and incomes for that sector. Add low investor confidence and a monsoon playing truant to the government subsidy circus (cannot call it policies anymore) and we have the makings of a perfect recession storm.
Sorry if I sound like the voice of doom, but better to prepare ourselves for difficult times than living in denial.
Denial like the finance ministry who say that the Fitch downgrade is pointless because its based on old data. If it is old data, do they intend to say the downgrade should have come earlier?!

Last edited by selfdrive : 19th June 2012 at 16:21.
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Old 19th June 2012, 16:25   #23
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Toyota has joined the party; Fiat is considering it too.

Auto companies stop production as demand slump continues - The Times of India

Gist : Toyota has stopped production of petrol vehicles and as per this report, Tata has stopped production of only commercial vehicles.
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Old 19th June 2012, 18:38   #24
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

It's also rumoured that some of these companies are looking to make the India units export-oriented. A major European carmaker recently approved a proposal for LHD cars to roll off their India production lines, targeting demand in the Middle East market.

It's NOT a good time to be a car manufacturer in India right now.
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Old 19th June 2012, 18:57   #25
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

This is happening because auto manufacturers are getting hit on multiple fronts:

1. High interest rates - everybody expected RBI to cut rates yesterday but that did not happen.

2. Skewed Diesel pricing policy and uncertainty over whether the government will impose a "diesel tax".

3. Overall economy is slowing down so people are on a wait and watch mode when it comes to putting their hard earned money into buying a new car
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Old 19th June 2012, 19:39   #26
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Unless you have surplus cash lying around to spend, most of us would be looking to stay away from any major purchase with all the uncertainty in the market. It's hard to put all the blame on the car makers either, they have specific targets that have to be met of course and with the kind of inventory hold up they're facing there isn't too much they can do.

Of course this isn't just about cars but the Indian economy as a whole being affected by bad policy making. It really isn't an issue that can be dealt with singularly of course, unless the death grip on the whole economy is relinquished we might not see that much of an improvement. Anyone in the government listening?
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Old 19th June 2012, 19:49   #27
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Quote:
Originally Posted by chennai-indian View Post

2. Skewed Diesel pricing policy and uncertainty over whether the government will impose a "diesel tax".
If there is indeed something called a "diesel tax" rumor doing the round, the concerned authority should either confirm/deny. Keeping it as rumor will only help thugs to loot prospect buyers money.

If the tax is one time, then it will cause a whole lot of unfair advantage to all those who already bought a car. (Not blaming anyone, but this will look like how the developed nations says amount global warming by developing countries when they enjoyed the benefits of burning fuel much earlier).
And if its the recurring tax, man, who will buy what :S
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Old 19th June 2012, 20:26   #28
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Quote:
Originally Posted by GTO View Post
It has been reported earlier that inventory levels at manufacturer & dealer levels are at an all-time high. Back of the envelope calculations estimate currently unsold inventory at over 150,000 cars (all manufacturers) from the month of May. This is indeed an all-time high.

Indian Express reports that VW & Tata Motors are planning a temporary block on production, primarily to clear up unsold inventory. It's obvious that production has exceeded demand over the last 3 months. Usually, manufacturer reps will try to stuff inventory down to the dealer. However, when dealer inventories pile up, they'll refuse to entertain any new cars from the manufacturer.

Inventory costs are a significant drain on finances and result in huge interest payments to the banks (who finance the inventory held at any point of time).



Source & Full Article

Indian Express

Related Thread

Govt's apathy toward the Indian Car Industry (Why this Kolaveri for the Indian Car Industry?!!)
Thanks Rushabh for the news. Its a sad, sad, sad state of affairs.
In fact, inventories of unsold cars, components and spares made Chrysler Motors tumble in the late 1970's. Lee Iacocca took over and he records in his autobiography that the first thing he did was to reduce the inventories to the bare minimum.He later steered the company back to its original place.
Back to the topic, the future seems brighter due to the ensuing change at the Ministry of Finance. The diesel tax (excise duty proposed) may be seen as retrograde by the car makers and other foreign investors, who see inconsistency and lack of foresight in such steps. They wont come forward to invest be it any industry, where the tax monster once asleep and allowing a free for all can suddenly awaken when it finds the people around it are "exceeding the monster's limits". For these limits to dwindle and recede, it can activate its fangs, devouring all the growth. Thats quite a lack of vision and we are under watch by investors from abroad, owing to the retrospective tax regime (Vodafone capital gains tax). Why at all then the investors were made to invest huge amounts in diesel technology? Could they not foresee a stagnation in the subsidised diesel prices (its needs guts to raise 'em) and meteoric increases in petrol prices after the latter's decontrol. The demand was tilted in favour of diesel cars and now they awaken and want the guillotine to be used. Any layman and not an economist could have predicted the rise in demand for diesel cars.
Foreign capital will ultimately fly away and how can the rupee gain vis a vis the US dollar when the foreign exchange reserves dwindle?
Going by the day to day news on economic matters, it is expected that the diesel tax may not get the "aye" from the new team at the helm, under the Hon'ble PM. Lets hope my forecast come out true.

Last edited by anjan_c2007 : 19th June 2012 at 20:41.
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Old 19th June 2012, 20:45   #29
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

I somehow have always felt that the recent growth seen in the Indian car market was stage managed at some level. Each newly launched car ( or atleast most of them) goes into a waiting period of months together with some even touching a year. Plus with so many options to choose from in each segment, its bound to be getting tough for most car makers to hold on to the customers and ensure those solid sales figures month after month. Add to it the whole drama of the fuel prices and subsidies and you will be cooking up a recipe for disaster.

Only if the govt could muster up courage and take a firm stand either in favour of petrol or diesel and give a commitment that they would stick with this stand for atleast a couple of years, would the car sales again start picking up. Right now the buyer is just confused trying to figure out his fuel preferences.
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Old 19th June 2012, 22:13   #30
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Default re: VW & Tata Motors temporarily slam brakes on Car Production. EDIT : Others follow suit

Heard that Maruti plant will be shut for ~10-12 days for annual maintainence/summer holidays. So few new diesel car delivers from Maruti. Delivery times were coming down, any shutdown now will further delay the deliveries.
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