NEW DELHI: The country’s largest car-maker Maruti Suzuki India today reported a 53.25 per cent fall in sales in October to 55,595 units due to labour unrest at its Manesar plant, which severely affected production.
“The labour unrest at company’s Manesar plant during October, 2011, adversely impacted the production and sales numbers. The company lost production of over 40,000 units (Gurgaon and Manesar) in the month,” it added.
The Manesar facility rolls out MSI’s high volume compact car Swift, which currently has undelivered booking orders for about one lakh units. The plant also produces hatchback A-Star and sedan SX4.
The simultaneous strike at Suzuki Powertrain, which makes engines and transmissions, in support of MSI’s Manesar plant’s workers, affected production at the Gurgaon facility also.
The national capital-based company recorded sales of 51,458 units in the domestic market last month, a 52.16 per cent fall from 1,07,555 units in October, 2010.
In a similar fashion, MSI’s exports decreased by 63.56 per cent in October to 4,137 units from 11,353 units in the year-ago period, the company added.
Total passenger car sales in the domestic market dipped by 55.11 per cent to 41,192 units in October from 91,754 units in the same month of 2010, it added.
Sales of the company’s mini-segment cars, including the M800, A-Star, Alto and WagonR model, fell by 54.86 per cent to 25,009 units from 55,404 units in October, 2010.
In the compact segment (comprising the Estilo, Swift and Ritz models), MSI witnessed a 56.09 per cent dip in sales to 10,859 units from 24,729 units in the same month a year ago.
Sales of MSI’s DZiRE model decreased by 48.14 per cent to 5,001 units from 9,644 units in the corresponding period a year ago.
In addition, MSI’s mid-sized sedan SX4’s sales slipped by 83.81 per cent to 320 units from 1,977 units in the year-ago month. Luxury sedan Kizashi witnessed sales of three units.
At 10:34 AM, shares in Maruti Suzuki were down 0.72% at Rs 1118.70 on the BSE.
Hit by repeated incidents of labour unrest, Maruti Suzuki India expects car production at its Manesar plant to reach normal levels only by the end of December this year.
The Manesar plant was rolling about 1,200 cars every day before the first strike hit in June. The unit produces Maruti Suzuki’s Swift, A-Star and SX4 models.
The 14-day-long strike at the plant, causing an estimated over Rs 700 crore loss, was called off following a tripartite agreement that reinstated 64 dismissed permanent workers and took back 1,200 casual workers. However, 30 permanent workers remain suspended.
To push its sales, the company offered heavy discounts in the last quarter. The average discount during the July-September period increased to Rs 13,500 per car from Rs 9,500 per car, MSI Chief Financial Officer Ajay Seth said.
On production capacities, Pareek said MSI was hiking the output of its compact car Swift to 16,000-17,000 units per month from the existing 10,000-12,000 units a month.
MSI is also ramping up the production capacity of its sedan DZiRE to 10,000-11,000 units a month from 7,000-8,000 units.
When asked about demand for diesel cars, Pareek said the industry has witnessed demand for diesel cars rising by 24 per cent in the last six months, while the same for petrol cars has fallen by 11 per cent.
Last week, MSI posted a 59.81 per cent fall in net profit to Rs 240.44 crore for the quarter ended September 30, mainly due to production losses at Manesar because of the labour unrest and foreign exchange losses.
Total income from operations during the quarter under review also declined by 14.38 per cent to Rs 7,831.62 crore.
Seth said the company suffered an impact of about Rs 100 crore due to forex losses.
Alarmingly for the firm, dealers said, is the fact that around half the customers who cancelled orders have opted for rival brands such as Toyota Liva and Volkswagen Polo.
The new model of Swift, one of the top selling cars from Maruti Suzuki India (MSI), was launched in August. The firm has about one lakh undelivered booking orders of Swift.
Depending on petrol and diesel options, and geographical locations, buyers are waiting for 2-7 months to own a Swift.
“There is a huge waiting period for the Swift, mainly because of the impact on production at Manesar due to the strikes. The petrol Swift has a waiting period of about 22-24 weeks, while the diesel version currently has waiting period of about 24-26 weeks,” an executive at a Delhi-based dealership said on the condition of anonymity.
He said for the last 1-2 months, no Swift model has been delivered by the company to the showroom.
“Because of the long waiting period, many people are cancelling their bookings. In our showroom, 2-4 per cent people have cancelled their Swift bookings and shifted to other models like Ritz. Some people have even moved to other car makers,” the executive said.