[JayPrashanth]

Indian car and utility vehicle major Mahindra &Mahindra, has announced that it would observe "no production" days at its manufacturing facilities across multiple locations in India. These production cuts, which will happen later this month, could range from 1 to 8 days. The production cuts are in view of the slowing down car sales in India, which have suffered the 8th straight month of decline.



Note: Mahindra Scorpio image used for illustrative purposes.

Here's official word from Mahindra,

M&M, as part of aligning its production with sales requirements, would be observing 'no production days' at its automotive plants for a period ranging from 1 to 8 days during the remaining period of July.

Days ago, market leader Maruti Suzuki announced that it was retrenching 200 contract workers from its Manesar factory as it was going slow on diesel engine production. Mahindra following in Maruti Suzuki's footsteps is emblematic of the troubles faced by the Indian auto sector. Mahindra's production cut comes at a time when the outlier of the Indian car market, the SUV segment, is facing new pressures.

Earlier this year, the Indian government increased excise on SUVs. Although Mahindra has managed to get around the excise hike by lowering ground clearance of its flagship SUV (with other Mahindra SUVs to get the lowered ground clearance soon), the SUV segment has also seen the advent of new competition. The likes of the Renault Duster and the Ford EcoSport are two new launches that seem to be weaning SUV buyers away from Mahindra products.

For the record, the Mahindra &Mahindra stock tanked sharply on the day when the Ford EcoSport's pricing announcement was made. India Ratings, a part of the Fitch Group, has downgraded its outlook of the Indian auto industry from stable to negative. Expect more such production cuts to come from multiple car makers in India over the next few weeks as pressures such as rising fuel prices and high interest rates continue to be major demand-dampening factors.

[analyse]

I believe that Mahindra is suffering in part due to its own ills. Inspite of having a great product brand, their quality niggles have kept many new customers away from them and even repeat customers (which traditionally is the sweet spot for a brand).

If Mahindra can proactively address issues with their vehicles and adopt a "minimum problems for the customer" ie preventive & corrective maintenance approach (instead of their current, really good breakdown maintenance approach), they will win over market share - since their vehicles are real value for money products.

Granted new launches will grab away some eyeballs - but if we look at how some of their vehicles continue to sell well even after years, this proactive approach will help win them lots.

[agambhandari]

Saw the news in today's paper as well, it seems like a bolt from the blue considering how SUV segment is the only one witnessing growth.

But it does seem realistic considering,that Growth is actually coming from the cars that weren't ther a Year ago!
Well, it doesn't seem you can survive the tough market, even if you nearly master the only hot segment! Well , of course there is a little segment that is booming, which Mahindra is catering too, with a dated and boring product(Read:Quanto).

But Mahindra does need to work on its A.S.S. The recent posts on the XUV ownership thread by Anshuman puts it even worse than A.S.S. What's worse is that even the Product quality itself is very much shy of the modern global standards.

Look forward the S101 to work some fortunes, but not much if they keep up the present A.S.S. facility.

[deetjohn]

The industry is reeling under pressure and this trend of production cuts will be there for all volume movers.

And coming back to Mahindra, I think they are at far too many fronts. The Logan platform and those 2 wheelers are unnecessary distractions. I don't think Mahindra is getting time to concentrate on the bread and butter UV models.

Mahindra, core competency does make a lot of sense, especially when the climate is bad.

[CoolFire]

Compared to most other players, Mahindra where actually having sharp focus - on the UV space. The Logan platform and two wheelers were actually a minor portfolio compared to their UV volumes.

I think, more than any strategic measures as such, the general economic mood coupled with the inching up of diesel prices could have done the harm (Otherwise, they were cruising quite good until a quarter earlier).

Look who is gaining in the diesel space, only players with smaller engines and better FE figures.

Yes, quality may also be an issue, especially in the case of XUV5OO. But overall I think they need to take a quick step into economic diesels, as the fuel is never going to go back to its dirt cheap days.

[volkman10]

Mahindra's production cuts continue.

Mahindra & Mahindra to stop production for up to 6 days in forthcoming months!

The announcement comes in the wake of declining sales the company has witnessed.

M&M today reported 21.17 per cent decrease in its total sales at 37,096 units in July, 2013 as compared to 47,059 units in the same month last year.



http://economictimes.indiatimes.com/...w/21528176.cms