Wed, 29 Jun 2011 08:25:21 GMT

Car makers prune output to suit dip in demand

With demand slowing considerably over the last few weeks, most car and sports utility vehicle makers are keeping production levels low and close to the retail level to suit the demand, which is set for a downward swing over the next two months.

Car makers prune output to suit dip in demand

The industry witnessed a near nine per cent cut in production last month, compared to April. With demand this month being poorer than May, car makers say manufacturers fear lower production levels than last month.

Hyundai Motor India (HMI), the country's second largest car maker, has been witnessing demand weaken over the past two months. "Market demand has been lower this month so far and sales could end lower than last month. Buying sentiment has been very weak," said Arvind Saxena, director, sales and marketing, HMI.

According to data provided by the Society of Indian Automobile Manufacturers (SIAM), drop in production of cars was the highest at 11 per cent in May compared to April. Although manufacturers are tight-lipped about their output in the current month, they say meeting the levels of May seems difficult.

"The market is moving at a very slow pace, but because of our promotional schemes, sales are not looking bad. We are not expecting any improvement in demand in the conditions in the coming months. Production this month could almost be at par with May," said P Balendran, vice-president (corporate affairs), General Motors India.

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