INDIA: Carmakers extend production breaks as market softens

By Chris Wright | 5 November 2013

The festive season often brings with it a boost in car sales in India but a downturn in the market this year has not been relieved by a spike in demand.

Rather than increasing supply to dealers as usual, many carmakers are opting for 'block closures' during November. Much of Pune's automotive cluster has extended the traditional two to three-day Diwali holiday to a week to bring inventory in line with demand. These include Mahindra & Mahindra, Tata, General Motors and Volkswagen.

Suppliers to the carmakers say production plans for November assume output 10% to 50% lower across various models. Tata Motors said its production plans are “continuously calibrated keeping in mind estimated demand”.

Toyota Kirloskar, which makes the Innova and Corolla, has already announced it will move to a single shift in November. GM India said its Talegaon plant is closed for five days next week and the Halol plant for three days on account of Diwali.

The company said it normally observes a three-day holiday during Diwali with some adjusted off-days having worked on Sundays/other holidays. This year, in the case of the Talegaon plant, it has been extended by two more days and has been combined with a maintenance shutdown for the plant.

However, Mahindra & Mahindra said that its non-production days are part of an annual maintenance shutdown plan planned at the beginning of the year and have nothing to do with a slowdown in demand.

A spokesman said: “Our sales in October have grown over September. Generally during Diwali, the level of absenteeism is more, so it makes business sense to not produce when the attendance is low."

VW also said its maintenance shutdown was planned and the company was on course to meet production targets.

Traditionally, the automotive industry in India shuts down for maintenance twice a year, first in June or July and the second in the last week of December as companies try to reduce inventories at the year end.