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Home > Business > Business Headline > Report

Auto firms may stop production

V Phani Kumar | April 22, 2003 13:30 IST

Production at domestic automobile companies is set to come to a grinding halt as the ongoing truckers' strike takes a toll on their supply chains and distribution networks.

Most companies have so far managed to feed their assembly lines from the limited stocks at their plants. But they said they would not be able to run their plants if their vendors did not make deliveries over the next few hours.

Maruti Udyog Limited, the largest passenger car-maker in the country, on Monday admitted that the week-long strike had brought down production at its Gurgaon facility by 30 per cent.

Maruti Managing Director Jagdish Khattar told the media in Bangalore that the supply of components and accessories from its vendors had virtually stopped.

"Though we have not shut the plant, we are somehow managing with the earlier supplies. A few of our vendors, who have their warehouses near our plant facility, are supplying some inputs," Khattar said.

Tata Engineering said its passenger car operations could continue for only two more days, while the trucks division could continue "slightly longer."

"There is a severe shortage of parts, especially at our car plant, where we may not be able to continue production beyond two days. The production of commercial vehicles can continue for a few more days as the stock position there is slightly more comfortable," a Tata Engineering spokesperson said.

Both Hyundai and Ashok Leyland said they could maintain their production for only one more day (till Tuesday), while Bajaj Auto said its stocks could last "at best till the week-end."

"Our production has been badly affected, and we may have to go for a partial shutdown from Wednesday if the strike does not end by then," Ashok Leyland Managing Director R Seshasayee told Business Standard.

A Hyundai Motor India spokesperson said the company's stocks would last till Tuesday. "We will have to review tomorrow (Tuesday) whether we can continue production any longer," he said.

"We will not be able to continue production beyond this current week as our inbound supplies have been badly affected. All profit-making companies have to follow the just-in-time manufacturing practice, which is why we did not have too much stock," R L Ravichandran, vice president (Marketing & Business Development), Bajaj Auto, said.

Mahindra & Mahindra said it would "start to lose production within a couple of days". "We had anticipated the strike and covered ourselves for 4-5 days. So far, we haven't lost production, but we will start to lose production in a couple of days' time," Mahindra & Mahindra chief operating officer (Automotive Sector) Pawan Goenka said.

The situation at Fiat India was "critical", a company official said, without dwelling on specifics. Seshasayee, also the president of the Society of Indian Automobile Manufacturers' Association, said the apex industry body would make a public announcement on Tuesday on the impact of the strike on the automobile industry.

The strike has also affected the distribution network of the automobile companies. The distribution of Maruti's various models across the country has come down 10-15 per cent. The company's installed production capacity is about 350,000 units per annum.

While inventory has been piling up at the plant site, several Maruti dealers have reported a fall in stocks. Stocks of the Maruti 800 and the Alto, the fastest selling models from the company's stable, have also been hit.

With no let-up in the strike, Maruti has started using rail rakes to dispatch its vehicles across the country and advised vendors to maintain supplies through rail freight lines.

Industry sources said retail sales would not be immediately affected as dealer inventories are usually higher than stock inventories at the automobile companies' end.

Automobile analysts said the financial loss to the industry from even a single day's loss of production could run into hundreds of crores of rupees.


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