NEW DELHI, June 22: With auto makers cutting down production due to demand slump, component manufacturers are also scaling down their output to prevent inventory pile up.
“Ours is an industry directly linked to the automobile manufacturers. If they are cutting down production, we also adjust our production as per requirement and regulate our output,” Auto Component Manufacturers Association (ACMA) President Arvind Kapur told.
He said many component manufacturers have “adjusted production so that there are no inventory pile-ups”.
While he did not quantify how much the production cut is in the component sector, Kapur said “thankfully for the sector, exports have been growing which has partially enabled the companies to offset decline in domestic demand.”
When asked if there has been any retrenchment due to the cut in productions, Kapur replied in the negative, but said: “These trying times for the auto component sector. Many of the component companies are now utilising the current situation to train their employees.”
As per ACMA, the components industry has a turnover of around USD 40 billion in 2010-11 and is estimated to touch USD 66.3 billion in 2015-16. India’s exports from the sector stood at about USD 5.2 billion in 2010-11, expected to reach USD 12.3 billion 2015-16.
As vehicle sales continue to dwindle due to high interest rates and petrol prices, many automobile manufacturers in India have planned to shut down their plants temporarily to reduce inventories.
While Fiat India is considering shutting down plant for a few days next month, Tata Motors has stopped production of commercial vehicles at Pune from June 22 to June 24.
The country’s largest car maker Maruti Suzuki will have its week-long annual maintenance shut down from next week. Toyota Kirloskar Motor has rationalised production of its petrol cars due to low demand.
Car sales in India grew at the slowest pace in seven months during May with just 2.78 per cent rise as high interest rates, which are hovering around 11-13 per cent, and petrol prices hit the market. (PTI)
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