Retail sales were higher than dispatches in May and June, and booking levels hit 85-90% of pre-Covid levels, compelling car makers to ramp up output.
Last week, Maruti Suzuki added a second shift at both Gurgaon and Manesar plants, while Hyundai, which was already operating two shifts to meet domestic and export obligations, is considering a third shift in the coming weeks. Maruti Suzuki has been running an extended shift of 10 hours at both plants to deliver more in the era of social distancing.
The Gujarat subsidiary of Suzuki is likely to introduce a second shift in the second half of August, about the same time its facilities in the National Capital Region add a third, based on sustained demand, said people in the know.
According to people in the know, the production plan for Maruti Suzuki and Hyundai is estimated to see a rise of over 100% from June to August. Led by a ramp-up by the top 3, production for July is seen at 1,70,000 lakh — almost 40% more than June. It will be further bumped up to 2,20,000 units in August, another spike of over 25% month-on-month. “Maruti Suzuki, with support from vendor partners, is cautiously ramping up operations.
We have started a second shift at Gurgaon and Manesar to meet customer demand.
The focus and priority, however, still remain the safety and well-being of all staff members,” said a Maruti Suzuki spokesperson.
Officials at Maruti Suzuki, Hyundai and Mahindra refused to share specific production forecast, but said they are looking at an aggressive increase.
Gaurav Vangaal, associate director at IHS Markit, who specialises in production forecasts, said car makers are likely to recover to 85-90% of pre-Covid levels of production by the time the festive season peaks, thanks to rural demand and strong traction for SUVs.
According to multiple vendors in the know, Maruti Suzuki is planning to produce 95,000 units in July, which will be increased to 1,15,000 units in August before hitting pre-Covid level numbers in September-October at 1,35,000-1,70,000 units.
Similarly, Hyundai is planning for an output of 35,000 units in July, 45,000 units in August, before touching almost 100% production output in September.
“We reached 75% of last year’s levels in June,” said Tarun Garg, director (sales and marketing), HMIL. “In July, demand rose in double digits on-month.
We are hoping to reach 90% of last year’s levels by month-end. India is a resilient market and has recovered faster than others. If the product is good, customers are buying even in these trying times.”
Traction is particularly strong in tier-II cities. Garg said Hyundai is ramping up production, and wholesale volumes too should be at 100% of pre-Covid levels in August. Soon after lockdown was lifted in Chennai, Hyundai got clearance to operate with almost a full workforce but under new social distancing norms.
The company may be adding another 500-600 workers for a third shift.
Mahindra, which was severely impacted by the transition from BS-IV to BSVI, is pushing for a quicker ramp-up, with almost all plants likely to start a second shift, barring the commercial vehicle manufacturing lines.
Rajesh Jejurikar, executive director, automotive and farm equipment, Mahindra, told ET demand is much better than expected. Due to the unique situation of transition to BS VI, the company had very little stock when the factories were shut down. “The biggest focus on the automotive business is to ramp up production quickly as demand for some of the key models — such as Bolero and Scorpio— is very strong. Right now, it is all about feeding the pipeline and ensuring adequate stock availability to meet demand,” said Jejurikar.
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