- Four-wheelers and two-wheelers worth Rs. 35,000 crores and Rs. 17,000 crores respectively are unsold.
- Major automobile companies slowing direction for some time.
Major automobile companies such as Maruti, Tata, Honda, Mahindra have shut down their production of two-wheelers and four-wheelers due to the unsold stock of vehicles.
Huge Stock Piling Up
Latest data shows, at the start of June 2019, half a million four-wheeler passenger vehicles are left unsold in company dealerships worth $5 billion (Rs. 35,000 crores).In a similar way, the unsold stock of two-wheelers stands at 3 million units valued at $2.5 billion (Rs. 17,000 crores).
According to an estimate, passenger vehicles worth Rs. 52 thousand crores are lying about unsold, signaling bad days of the automobile industry and Indian economy too.
Main Reasons
According to experts, there are many reasons for this crisis. Rising fuel prices, liquidity crisis in non-banking financial institutions, slow growth in the employment sector and weak buyer sentiment are the major factors which led to this bad hit to the automobile industry.
In the last seven months, demand for passenger vehicles have fallen down drastically, claimed a journalist who has been covering the automobile sector for many years.
Top Automobile Executives say
Sugato Sen, Deputy Director General of Society of Indian Automobile Manufacturers (SIAM) quoted, “In last 10 years, we have not seen anything like this when all the segments are down. The start of the new financial year has not turned out to be very good for the industry.”
News reports suggested, Maruti Suzuki decided to shutdown from June 23-30 while Mahindra said that its manufacturing unit, Mahindra Vehicle Manufacturers will have no production days for 5-13 days in the first quarter of 2019-20.
Tata Motors’ Sanand Plant which is located in PM Modi’s home state Gujarat, was shut from May 27 to June 3 while the production unit of Honda Cars India was shut down from June 5-8.
“What’s the point in producing and pushing stock when the offtake is weak. We have calibrated our production based on demand in May and we will do so in June too,” said Mayank Pareek, president of the passenger vehicle division at Tata Motors.
Similarly, Renault, Nissan, and Skoda Auto also plan another shut-down round for 4-10 days in the month of June 2019 for “scheduled maintenance” claimed some reports.
But these are excuses to hide the real cause for shutting down which is piling stock of unsold vehicles.
The largest automaker of the country, Maruti Suzuki has the capacity to manufacture 15.5 lakh units at its facilities in Gurgaon and Manesar. The company is dealing with an inventory of around 50,000 vehicles as compared to an average of 25,000-30,000 cars.
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