Indian carmaker Maruti Suzuki on Wednesday announced that it had decided to shut down operations in its plants in Gurugram and Manesar in Haryana for two days – September 7 and September 9.

In a BSE statement, the company said both the days would be observed as “no production days”. Shares of Maruti Suzuki India were over 3% lower at Rs 5,861 in the afternoon trade on Wednesday.

Sales in the automobile industry had recorded multi-decade lows as passenger vehicle sales fell 30.9% in July, according to the Society of Indian Automobile Manufacturers. This was the steepest decline in a month since December 2000. The overall downturn in the market stood at 19%.

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Maruti Suzuki India’s announcement came days after it reported a 32.7% decline in the total vehicle sales in August, according to NDTV. Maruti Suzuki India cut its production by 33.99% in August, which was the seventh consecutive month for the country’s biggest automobile company to reduce its output. The carmaker produced 1,11,370 units last month as opposed to 1,68,725 units in the same month last year, Maruti Suzuki said in its filing to the Bombay Stock Exchange on Monday.

The auto company recorded a one-third decline in its sales at 1,064,413 units in August. The company’s domestic sales plunged by 97,061 units last month against 1,47,700 units it sold in August last year. Sales of mini cars, including Alto and WagonR, along with its compact segment models, such as Swift, Celerio and Baleno, had fallen sharply last month. Maruti Suzuki India’s export sales in August also plunged by 10.8% as the company sold 9,352 units compared to last year’s 10,489 units.

The automaker’s Chairperson RC Bhargava, on August 27, said that the company had cut 3,000 contract jobs as it battled rising inventory along with slowing demand in the Indian market. Bhargava had told shareholders at the company’s annual general meeting that new safety norms and higher taxes had “added substantially” to the cost of manufacturing cars.

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A slowdown

The industry is facing a crisis, with 15,000 jobs having been cut in the sector in the last quarter and almost 300 dealerships having been closed down in the last 18 months. The decline in consumer confidence, coupled with the crisis in non-banking Finance Companies, have caused a steep fall in passenger car sales.

With BS-VI emission norms coming into effect soon, prices of vehicles have also gone up since car manufacturers have to upgrade their products to meet the new norms. Manufacturers of two-wheelers are also looking at a compulsory upgrade of three-wheelers to battery-powered vehicles by 2023. Two-wheelers have to complete the upgrade by 2025. This will cause prices to shoot up.

Society of Indian Automobile Manufacturers Director General Vishnu Mathur had said that the current downturn is not a purely cyclical one since “cycles don’t last this long”. “Something else has also failed,” he had said.


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