[zenren]

Looks like Maruti is sitting on a huge inventory of petrol cars.

Maruti Suzuki India Ltd (MRTI.NS) will suspend production of petrol cars at one of its plants on Saturday, a company executive said, as the country's top car maker looks to cut inventory amid slowing sales.

The executive did not say whether Maruti, controlled by Japan's Suzuki Motor Corp (7269.T), will extend the production cut beyond Saturday at the Gurgaon factory.

Source: http://in.reuters.com/article/2013/0...92704E20130308

[avira_tk]

It had to happen sooner or later, the current pricing differential makes petrol vehicles other than tiny hatches an extremely dicey proposition. Any car today, a diesel version has better economy and resale, only reason someone would buy petrol is because total running is less than 10k a year about town - this is a really small market for any serious volumes to materialize.

[JayPrashanth]

Link to News Section

The country's largest car maker and industry bellwether Maruti Suzuki is facing the heat from the sales slowdown, which the Indian car industry has been experiencing for many months now. Maruti Suzuki's marketshare for May 2013, in terms of dispatch sales, fell to 40% from a consistent 44-45%, the surest indication that all's not well at the nation's top car maker. According to IBNLive, inventory build up has led to Maruti Suzuki deciding to shut production of diesel cars for one day at its Gurgaon and Manesar factories. This shutdown will focus on cutting production of diesel engined cars, in what is a first for Maruti Suzuki, a car maker that has enjoyed robust demand for its diesel cars all along.



Combined, both factories build 5,000 cars a day with many top selling diesel cars such as the Swift hatchback, Dzire compact sedan and the Ertiga MPV being produced at these factories. So, tomorrow's production cut at these factories will give Maruti Suzuki some breathing space in terms of inventory build up. Over the past few months, Maruti has also been cutting back on petrol car production as petrol car sales bottomed out a while ago when car buyers shifted towards the cheaper, diesel fuel. Now though, diesel car sales have also been slowing down as the Indian government implements the diesel deregulation through periodic hikes in diesel prices.

To boost diesel car sales, Maruti has been offering discounts and quick delivery of many diesel car models. Apart from the one day production cut at Gurgaon and Manesar tomorrow, Maruti Suzuki will also embark upon its annual maintenance shutdown, which is on schedule, from June 17th to 22nd. This shutdown will further allow Maruti Suzuki to align inventory levels to market demand. Notably, Maruti Suzuki, in the past, had announced that it would regularly resort to factory shutdowns for one or two days every month to ensure that it doesn't over produce cars, especially at a time when supply outstrips demand.

Maruti Suzuki isn't the only car maker caught in the throes of the sales slowdown in India. Tata Motors, Mahindra, Toyota and many other car makers in India are going through a lean patch, reflecting the overall buyer sentiment in the country. The Reserve Bank of India, which controls the rates at which banks borrow and lend, hasn't cut interest rates significantly, citing inflationary pressures. This has meant that car financing isn't getting any cheaper, forming another jolt to the car industry. Also, the excise duty hike on cars classified as "SUVs" is a blow that the Indian car industry has had to contend with.

[i74js]

Seems that the launch of new models, discounts and all other measures are not resulting in the desired footfall at the showroom. It is time for the Indian car makers to take stock followed by necessary corrective actions to ensure that the production haults are reduced.

- Can market continue to grow the way it was growing for past decade or so (say from 1998 onwards). New production capicity addition should be planned accordingly.

- Is Indian market now mature to get first class products and not downsized / down specs products which were sold to them? The success of German Premium Brands in India should ring bells to mass market players too. Why safety is optional for Indian buyers and come as part of only the upper end product line?

- Why only corporate discounts? why not discounts to normal buyers - what good does a corporate do to the car manufacturer which a normal buyer doesnt?

- Why more than 50% of cars owners go away from ASC after 1 - 2 years? How to retain those customers and make money from ASS to maintain profits. Why not introduce systems like online estimate for a particular km service through the manufacturers portal? Why some dealers are selling undesirable items as part of service? Why several dealers resort to thefts - by not changing oil and other components as part of service?

- Why discounts and why not extended warranty? The companies have no faith on their product or they do not like Indian driving?

- When I take a test drive - I am liable to compensate for any damage to the car, but when I give my car for service - it is at my risk- why? Its better to take the car to the neighbourhood service center where everything is done before my eyes be it change of parts, oil or even test drive and at a cheaper rate (with genuine parts).

[gomzi]

Originally Posted by avira_tk

It had to happen sooner or later, the current pricing differential makes petrol vehicles other than tiny hatches an extremely dicey proposition. Any car today, a diesel version has better economy and resale, only reason someone would buy petrol is because total running is less than 10k a year about town - this is a really small market for any serious volumes to materialize.

How times change due to our capricious fuel pricing policies, that too within just a few months.

With fuel prices gap between Petrol & Diesel at current levels and maybe be reducing over the next couple of years, petrol would be the better option for most car owners who seldom use their cars.

There are various calculations that one can make to check whether buying a diesel car with ~ Rs. 1L - 1.5L price premium is justified or not, but when the argument reaches mass media with news papers declaring that diesel car price premium can be made up only after 80-100K kms, then thats going to affect demand for the oil burning models sooner rather than later.

One future trend could be that the price differential between petrol and diesel car models falls to a more realistic level.