Maruti responds to slowing sales by lowering production

Production and delivery to dealers has been reduced in order to clear the higher than normal inventory at Maruti’s Arena and Nexa dealerships.

Published On Aug 24, 2024 08:00:00 AM

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Maruti responds to slowing sales by lowering production

Maruti Suzuki is adjusting production to reduce market stock and is closely monitoring demand trends, the management of its parent company, Suzuki Motor Corp, told investors. The comments came as the Federation of Automobile Dealers Associations (FADA) has raised concerns over a pile-up of unsold cars at dealerships and called on automakers to rationalise production.

Despatches to dealers fall 10 percent YoY in July on weak demand
Average discounts in April-June rise to Rs 21,700 from Rs 14,500 in the previous quarter
Maruti dealerships had an inventory of 37 days as of June-end

During July, Maruti Suzuki’s domestic passenger vehicle despatches to dealerships fell around 10 percent year on year, and volumes in the April to July period declined 2 percent from a year ago. The company noted that the demand has been weaker than expected this year.

Suzuki Motor Corp’s management stated that inventory adjustments are needed in India even though retail sales have improved slightly in July compared to the level in April-June and risen about 3 percent year on year in April-July.

So, the company, which raised the output in the first two months of the fiscal ending March 2025 over the year-ago period, started squeezing it from June, its monthly production data shows.

The pile-up of unsold cars at dealerships has also resulted in higher discounts. Maruti Suzuki provided an average discount of Rs 21,700 per vehicle during the April-June period, up from Rs 14,500 in January-March.

Recently, Maruti Suzuki’s executive director for Corporate Affairs, Rahul Bharti, said inventory levels, though slightly higher than optimal, are manageable. He noted that 30 days of inventory is considered normal, and the company had an inventory of 37 days at the end of June.

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