Maruti Suzuki To Halt Production At Gurugam And Manesar Plants On 7 And 9 September 2019

• This situation comes off the back of a 36.7 per cent decline in sales last July compared to the previous year.
• Reasons for this shutdown include less demand, slower economic growth, and the BS6 dilemma.
• This downward spiral looks likely to continue if major corrective steps are not taken.
• Maruti, like other carmakers, hope to claw back the sales deficit in the festive season.

The past year has seen the Indian automotive industry badgered, bruised and suffering its worst slowdown in two decades. In July this year, Maruti Suzuki also suffered suffered a 36.7 per cent sale loss compared to the same month in 2018. It struggled to reach even 1 lakh units that month, with sales totalling 96,478 units. And it doesn’t look like it’s getting any better for the carmaker as it has announced a production halt at its Gurugam and Manesar plants on 7 and 9 September 2019.

Much of the reasoning behind this shutdown can be attributed to less demand, leading to manufacturers having to cut down on production -- and in Maruti Suzuki’s case even shutting its factories down to adjust inventory. The aftermath of this is leading to dealerships slowly being shut down due to rising inventory management costs, rendering these dealership outlets unviable. In turn, it could result in layoffs by the auto makers and auto dealers across the supply chain.  For a more detailed look into the factors behind this slowdown, head here.  

Also Read:

• Renault Triber Vs Maruti Suzuki Ertiga: MPV Face-off

• The Lovable Jimny Is Not Coming To India Anytime Soon

There are manifold reasons behind this downturn but some of the root causes include stricter lending restrictions due to slow economic growth. A combination of other factors such as higher insurance costs and tax increases have also contributed to the drop and resulted in a major liquidity crunch.  

Get latest updates on
the automobile community

Login Now

There is also the dilemma of BS6 emissions coming into effect for all its vehicles in 2020. This has confused customers on whether about purchasing a vehicle before the norms kick in is worth the extra money. Maruti Suzuki is also planning to phase out diesel cars due to the extra costs involved in convert its BS4 inventory to BS6. This has essentially affected sale of diesel cars for the carmaker, leading to a surplus of inventory. While Maruti has been offering discounts to clear its inventory, it has led to customers waiting for further discounts, which has further delayed purchase decisions. 

Other miscellaneous factors affecting sales include increasing road taxes, rising GST rates on automotive parts as well as India’s rushed EV roadmap. The rise of ride-share apps like OLA and Uber cannot be counted out either, as it eliminates the need for a customer to own a car. 

This downward spiral will continue if major corrective steps are not taken, and we could very well be on the cusp of a major recession in the world’s fourth largest automotive market. Maruti, like other carmakers in India, is hoping to bank upon more new launches and the festive season with a glimmer of hope. However, that won’t be enough -- major reforms and incentives are needed to drag the industry out of this slump.  

Is this the best time to buy a BS4 car? We can tell you that contrary to popular belief, now might actually be the best time to do so. Head here to know why.