Mahindra to cut production in July

Indian car and utility vehicle major Mahindra &Mahindra, has announced that it would observe "no production" days at its manufacturing facilities across multiple locations in India. These production cuts, which will happen later this month, could range from 1 to 8 days. The production cuts come on the back of slowing down car sales in India, which have suffered the 8th straight month of decline.

Note: Mahindra Scorpio image used for illustrative purposes. 

Here's official word from Mahindra, 

M&M, as part of aligning its production with sales requirements, would be observing 'no production days' at its automotive plants for a period ranging from 1 to 8 days during the remaining period of July.

Days ago, market leader Maruti Suzuki announced that it was retrenching 200 contract workers from its Manesar factory as it was going slow on diesel engine production. Mahindra following in Maruti Suzuki's footsteps is emblematic of the troubles faced by the Indian auto sector. Mahindra's production cut comes at a time when the outlier of the Indian car market, the SUV segment, is facing new pressures.

Earlier this year, the Indian government increased excise on SUVs. Although Mahindra has managed to get around the excise hike by lowering ground clearance of its flagship SUV (with other Mahindra SUVs to get the lowered ground clearance soon), the SUV segment has also seen the advent of new competition. The likes of the Renault Duster and the Ford EcoSport are two new launches that could wean SUV buyers away from Mahindra products.

For the record, the Mahindra &Mahindra stock tanked sharply on the day when the Ford EcoSport's pricing announcement was made. India Ratings, a part of the Fitch Group, has downgraded its outlook of the Indian auto industry from stable to negative. Expect more such production cuts to come from multiple car makers in India over the next few weeks as pressures such as rising fuel prices and high interest rates continue to be major demand-dampening factors.