Commercial vehicle manufacturer Ashok Leyland on Monday said seven of its facilities will have up to 18 non-working days this month because of continued weak demand for its products.
The manufacturing plant in Pantnagar, Uttarakhand, will be the worst hit, with 18 non-working days in September. The Ennore plant near Chennai will have 16 non-working days, while the ones in Alwar in Rajasthan and Bhandara in Maharashtra will not work on 10 days this month. Two plants in Hosur will not work on five days each, as will the cab panel and press shop in Tamil Nadu.
The company, part of the Hinduja Group, made the announcement in a filing to the stock exchanges.
News reports last week had claimed that the company had declared that there would be no production for five days at the plant in Ennore starting September 6, excluding Sunday. The plant, which saw almost 10 days of no production last month, has been hit by a 70% fall in sales of medium and heavy commercial trucks in August.
“The measure is due to continuing sluggishness and contraction in commercial vehicle market,” Business Standard quoted the company as telling its employees last week. “The need has arisen to continue the corrective actions to safeguard the interest of the company.”
The sale of all vehicles in the medium and heavy commercial vehicles category, including buses, dropped 63% last month to 4,585 units from 12,420 units in the same month of the previous year. The sales of light commercial vehicles fell 12% to 3,711 units in August from 4,208 units in the same month last year. Total vehicle sales, including all these categories, declined 50% to 8,296 units from 16,628 units in August 2018.
This development came amid a slowdown in the automobile sector in the country. Carmaker Maruti Suzuki last week decided to shut down operations at its plants in Gurugram and Manesar in Haryana on September 7 and September 9.
In July, passenger vehicle sales declined 30.9%, 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%. The industry is in crisis, with 15,000 jobs lost in the last quarter and almost 300 dealerships closed in the last 18 months. The decline in consumer confidence, coupled with a crisis in non-banking finance companies, have caused a steep fall in passenger car sales.
Union Minister of Road Transport and Highways Nitin Gadkari on Thursday assured the industry of all the help it needs from the government, including discussion on the matter of reduction in Goods and Services Tax with Finance Minister Nirmala Sitharaman.
Gadkari said the government was planning to reduce GST on hybrid electric vehicles, similar to the reduction for electric vehicles, from 12% to 5%. He added that he would discuss the possibility of providing export incentives to automobile makers like it was done in the sugar industry.
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