ICB Scoop: Mahindra &Mahindra could cut down utility vehicle production in April to realign inventory levels

Oh yes, it’s April Fools day today but what you’re going to read in this story is anything but funny. The great Indian car sales slowdown is hitting the strongest players in the industry and Team ICB’s roving eye in the sky, EarthFusion, has been keeping an eagle’s eye on car and utility vehicle production lines across the country. Here’s the scoop. Mahindra &Mahindra is contemplating a production cut in its utility vehicle making division for April and the official word is expected to arrive very soon. Before the official word arrives though, we’ll fill you in with all the dope as usual.

2013 Mahindra Maxximo Plus Mini Pick Up Truck

2013 Mahindra Maxximo Plus Mini Pick Up Truck used as an illustration

* Mahindra is all set to run a single shift across multiple utility vehicle production lines at its factories in India.

* This single shift operation is aimed at reducing the piled up inventory levels at the utility vehicle maker’s stockyards.

* This single shift operation could go on for all of April 2013.

* Mahindra will revise production schedules and notify the concerned parties involved with supply/logistics soon.

The sales slowdown in India and overall low sentiment has hit both the car and utility vehicle industries hard. Tata Motors has shut down production at Jamshedpur more than once and with Mahindra also all set to join suit, it is only a matter of time before more utility vehicle makers join the production cut brigade. When recession or a sales slowdown occurs, the utility vehicle market generally shows the signs of slowdown sooner than the car industry as utility vehicles are aligned more towards the commercial and transport sectors rather than the personal vehicle category.

Production cuts represent bad news not just for the car or utility vehicle makers but they also throw a spanner in the works for vendors and suppliers. Small scale suppliers are particularly hard hit in these hard economic times as many smaller suppliers/vendors operate on tighter margins than the bigger players. With the Indian government lurching from one political crisis to another, economic reforms to boost growth in the country could take a while to fructify. Until the economic reforms happen and growth gets back on track, the Indian car and utility vehicle makers could be in for some hard times.

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