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The Aftermath of Manesar Riots for Maruti

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Almost a week after Maruti Suzuki’s Manesar plant shut down due to the worker riots, the would-be effects of the lockout will damage the short-term position of the company. 

The plant was the primary producer of the best-selling Swift and Dzire. The company today announced that stock of both these models has run out. Current booking order stands at 55,000 units for Swift and 65,000 units for Dzire.

Meanwhile, company officials said that even if the production were to begin today, it would take up to 4 - 6 months to clear the backlog. There is no respite in sight for waiting customers as Maruti Chairman RC Bhargava has repeatedly denied the possibility of importing vehicles or shifting lost production to another plant.

No Diwali Dhamaka

India’s largest car manufacturer is also set to delay the launch of its new 800cc car due to the Manesar plant lockout. The car, which was to be the cheapest in the company’s portfolio, was initially set for a Diwali launch.

Diwali, along with Navratri is considered auspicious for purchases and the festive season sees car sales grow by about 25%. The lack of supply from the Manesar plant, which produces 5.5 lakh units annually, will be a big dent on Maruti’s sales.

Competition

Maruti’s poison could be meat for its competitors, especially those car manufacturers whose products are competing with the Swift and Dzire. There are already reports of models like Ford Figo, Toyota Liva / Etios and Volkswagen Polo being offered with discounts, free accessories and extended warranties.

Equipment manufacturers for Maruti are also feeling the heat of the lockout. There are about 200 ancillary units in Haryana who provide a host of products for the Manesar plant. Some of these dealers have already begun incurring losses and are being forced to lay off labourers. 

The Gurgaon plant meanwhile continues to perform to capacity with production of models like Alto, Wagon R, Ertiga and Ritz. 

Related thread

Violent clashes at Maruti Manesar plant; production shut down

 
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