The country's largest manufacturer of commercial vehicles by sales, Tata Motors, is lifting the production curbs imposed between October and December last year across all its plants that make commercial vehicles.
"From February onwards, there will be no need for production cuts in our plants. Compared to the excess inventory levels witnessed in the months of November and December last year, our current inventory level has fallen to about 15 days," said Ravi Pisharody, the company's vice-president, sales & marketing (commercial vehicles).
The plants are in Jamshedpur, Pune and Lucknow.
The company's inventory for the popular light commercial vehicle, Ace, stood at more than 30 days' supply between October and December.
Analysts say the restoration of production to the full capacity in February by Tata Motors could signal the company's expectation that demand for commercial vehicles will pick up in the coming months.
Tata Motors, which lords it over more than half of the domestic commercial vehicles market, undertook production cuts in the wake of an unprecedented drop in the domestic demand for commercial vehicles last year. The cuts, ranging between six and 15 days, were effected across all its plants that churned out goods carrier vehicles to pare inventories.
From October onwards, sales of commercial vehicles slumped by over 50 per cent. However, Pisharody said sales of buses, light as well as heavy, had not been as badly affected as those of goods carriers. "Our Dharwad plant, which manufactures buses in the 4-7 tonne category, and the Lucknow plant, which manufactures the Marco Polo buses, have not witnessed production cuts," he added.
Till date the company has supplied about 650 buses to the Delhi government, and recently bagged a Rs 2,200-crore (Rs 22 billion) Delhi Transport Corporation order to supply 1,625 ultra-low-floor buses and look after their maintenance over a period of 12 years.
"The cuts in production resulting in reduced inventory, the subsidies announced by the government for procuring buses by transport corporations, the depreciation benefits on buying commercial vehicles, and the pick-up in January sales - all of these have resulted in resumption of commercial vehicles manufacturing," says a Chennai-based truck finance executive.