Auto segment leaders plan to put output in top gear in the next few months

Mumbai: Maruti Suzuki, Hero MotoCorp and Mahindra & Mahindra — No. 1 in cars, two-wheelers and tractors, respectively — are planning a surge in production over the next few months, marking a revival from the lockdown months and a poor FY20, said people with knowledge of the matter. Experts said demand is rising for personal transport because of Covid distancing norms while a good harvest thanks to a normal monsoon has boosted farm incomes.Maruti Suzuki is asking vendors to prepare for a record output of as much as 193,000 units in October, more than July despatches by the overall market. The company’s previous peak monthly production was 182,000 units in May 2018. Hero MotoCorp is planning an all-time high production of up to 800,000 units in October-November while Mahindra & Mahindra is looking at producing 36,000 tractors this month ahead of Dussehra and Diwali. Hero MotoCorp’s last peak was 765,000 units in September 2018.“We continue to see very robust demand for all our tractors and, in preparation for the upcoming festive season, we will continue to produce at peak capacity in our plants,” said Hemant Sikka, president of farm equipment at Mahindra & Mahindra.Sales RevivalSikka declined to give specific numbers. “Supply chain continues to be challenging but has eased out in the last few weeks.”A Maruti Suzuki spokesperson said: “We do not give any guidance on volume production.” Hero MotoCorp didn’t respond to queries.77902117Maruti Suzuki’s tentative production schedule with vendors suggests that it’s looking at production of 155,000-158,000 units in September and 190,000-193,000 units in October. This would imply growth of nearly 30 per cent in the next two months after sales volumes grew 21 per cent to 124,000 units in August 2020.Hero MotoCorp has told vendors to prepare for up to 800,000 units in October and November, which is likely to translate into 35-50 per cent growth year on year.Mahindra & Mahindra tractor sales in the past two months have been at their highest ever on a monthly basis. The production schedule of tractor makers suggests that there would have been a 5-7 per cent rise in production over August.The higher output for September-October is linked to lower-than-average inventory thanks to a sales revival since the lockdown and the upcoming festive season. Some factories worked on Sundays and holidays in August to meet demand. India imposed a lockdown on March 25 with conditions being eased in May, leading to a recovery in June.An extended inauspicious shraadh period this year — which runs from September 2 to October 15 — may persuade buyers to defer purchases of new vehicles until the middle of next month. Still, an early monsoon and record kharif sowing mean crops are expected about 15 days earlier this year. Money from the summer crop should therefore be available well in time for the festive season. Also, the urban market is expected to pick up by the festival season, experts said. Covid-19 has led to people seeking personal mobility and avoiding public transport, but no one knows how long this will be sustained, so no vehicle maker would want to lose out on the festive bump due to lack of supply, said Gaurav Vangaal, associate director at IHS Markit.

from Economic Times https://ift.tt/3lIFlzF