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According to a media report, the slump in sales over the past few months has forced Mahindra to shut down production for up to 13 days.
In a notification issued to the Bombay Stock Exchange (BSE), the carmaker has reportedly confirmed that production will be halted for 5-13 days at various plants during the first quarter of FY2019-2020. It is said that this is unlikely to affect availability of vehicles as there is adequate stock in the market.
Vehicle sales have tanked in the past few months and the degrowth continued in the month May 2019. Mahindra sales dropped 9% from 48,097 units in April 2018 to 43,721 units in April 2019. Overall sales in May 2019 were down 3% compared to the same month last year. The commercial vehicle segment also saw a 9% decline in sales.
Source:
NDTV Link to Team-BHP News
I don't think it is just Mahindra; as per this report, Maruti and Tata too (although they haven't mentioned the exact schedule).
Quote:
At least seven out of top ten passenger vehicle manufacturers had reportedly announced production shutdowns between May and June. Maruti Suzuki, Tata Motors and Mahindra & Mahindra had stopped production for several days in May. These automakers, along with Honda Cars India, Skoda Auto, and Renault-Nissan Alliance, are planning another round of shutdowns ranging from four to ten days later this month for scheduled maintenance, reports suggest.
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Quote:
By the beginning of June, more than half a million passenger vehicles worth $5 billion and 3 million two-wheelers worth $2.5 billion were laying unsold at the dealerships, reports showed.
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https://www.businesstoday.in/current...ry/354856.html
The sluggishness in the automobile market and the headwinds are affecting new car sales. Almost all automobile makers have succumbed to these current adversities, where the mighty have also not been spared. Lee Iacocca book "An Autobiography" gives us some good marketing lessons. He reduced inventories and cut lots of deadwood among other steps that he took to resurrect Chrysler in the late 1970's and early 1980's. Unsold inventories are a major killjoy for automobile makers. Halting production is the best medicine available. Many other automobile makers may follow suit.
Because of their enormous fixed costs, stopping production is the absolute last resort for any car manufacturer. A big player doing this shows how sad the current market conditions are. Quite disappointing. Large manufacturers will endure the pain & move on, but the smaller brands simply don't have the balance sheet for such turbulent times. And not to forget, smaller suppliers & dealers.
With the election season behind us and the monsoon starting, I expect things to improve (or at least stabilize) in the coming months, but really good times are a while away.
Quote:
Originally Posted by GTO
(Post 4603506)
With the election season behind us and the monsoon starting, I expect things to improve (or at least stabilize) in the coming months, but really good times are a while away.
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Ashada month is around the corner, I wish things stabilize before festive season. Also the repo rate cut should give some relief to debt laden firms.
Quote:
Originally Posted by GTO
(Post 4603506)
Because of their enormous fixed costs, stopping production is the absolute last resort for any car manufacturer. A big player doing this shows how sad the current market conditions are. Quite disappointing. Large manufacturers will endure the pain & move on, but the smaller brands simply don't have the balance sheet for such turbulent times. And not to forget, smaller suppliers & dealers.
With the election season behind us and the monsoon starting, I expect things to improve (or at least stabilize) in the coming months, but really good times are a while away.
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Everybody is expecting things to revert, but not to form. It will get better than this, but but manufacturers may not have the same run as they have seen for the past few.
What I want to understand is, will this have a positive effect for me as a buyer? The prices have been beating all figures, whether its inflation, or growth. Can we expect a correction, or will manufacturers tie this all not to people' s shallow pockets and unwillingness, but to economic,infrastructural and other factors? Essentially, is the reason behind this, even partly, people not being able to afford the car that they want?
We are hearing about production cuts everywhere due to excess stock of cars. But has it translated into better discounts and sales push? Its quite some time that I have researched new car offers. But are these players like Maruti, Hyundai, Mahindra offering higher discounts now or are they just waiting for the stocks to clear at regular prices/standard discounts? Waiting for some sort of price correction before I buy another car. Right now, the prices for most cars make me feel keeping the existing cars at home is a better idea and numbs all itches for upgrade :D
There isn’t much room for discount on existing competition & prices. Sure there are few overpriced cars but usually they run discount year around.
In this forum itself there is a thread on car price breakup & data is quite shocking. Ex.factory price of a typical sub 8L/10L (on road) car is 1/3rd of its actual cost. Rest of the 2/3rd cost is comprised of tax/ses/duty/registration/road-tax/insurance.
Market isn’t willing to bite the apple again with absurdly low resale value on their present ride. Poor road infrastructure, poor law and order where driving isn’t peaceful anymore with so many rule violators going unpunished. Last of all, app cabs are available 24x7.
Things are very tough, due to the overall change in engines, most models getting changed completely, doubts about availability of spares for BS4, low resale value for old vehicles, many are waiting for the long term vehicle the latest engine & updated BS6. most models are also for a major change.
This is indeed a tough year. but for short term relief I expect a GST cut from 28 % to 18 %, supported by Rate cut to bring some flair in the market.
cheers
Seeing how the Govt cracked down upon CSD sales of expensive cars & given the massive under-recoveries compared to targeted GST collection, IMO there's no question in Govts mind of any reduction in GST or the cess.
Who knows, maybe in order to help the industry, govt may de-regulate policies in terms of BS-VI emission norms to allow limited respite.
IMO car companies will have to become operationally efficient to reduce costs & develop improvements within the product to woo customers.
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