Cash Crunch: Auto industry cuts production


Though the automakers are finding ways for a cashless purchase experience for their customers by partnering with Paytm, HDFC and even going as far as offering 100% finance, an inevitable decline in sales and footfalls has forced the companies to slash their production.

Industry officials feel the things are getting increasingly difficult after scrapping of the old Rs 500 and Rs 1,000 notes that came into effect from November 8.

Honda Motorcycle and Scooter India (HMSI), the second biggest two-wheeler manufacturer after Hero MotoCorp, said that the production is being controlled to maintain the balance (between sales and inventory). Y S Guleria, senior VP (sales & marketing) says, the company is working towards having “no-production days”, as they don’t want to load the dealer with excessive inventory.

Honda Cars too is controlling the production as well. Jnaneswar Sen, Senior VP, sales & marketing, said that the bookings have come down by nearly 40% this month as the currency crunch is prompting people to withhold new purchases.

Demand for components has been declined as well by 60 – 70% in Northern India. Dealers of Maruti-Suzuki have spoken about a “massive squeeze” in demand. Rakesh Srivastava, Senior VP (sales & marketing) at Hyundai India and Pawan Munjal, Chairman of Hero MotoCorp have confirmed of drop in footfalls at showrooms.


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