The ongoing strike at Maruti’s Manesar plant has put India’s largest passenger car manufacturer in a very tricky position. As the company delays giving in to the demands of the striking employees, it continues to incur heavy losses as production at their plant was halted. While the strike issue has not yet been resolved, the company is looking at whatever alternative it can come across to ensure that the wait period does not rise any further.
We recently reported how Maruti officials confirmed the strike will affect their sales growth for the month along with pushing the wait period for its diesel variants a month further. Maruti admitted that they do not produce cars without demand for them, as a result of which they won’t be able to supply booked models on time.
As a result of this, the company has now decided to shift the production of their diesel models like the SX4, DZiRE and Swift to their Gurgaon production plant. As of yesterday, the production halt following the strike has caused Maruti to incur loss of around 11,400 models worth INR 570 crores.
Maruti had shifted the production of the aforementioned models from its earlier Gurgaon plant to the new Manesar plant back in 2009. They are now exploring options for reviving the assembly lines at their Gurgaon facility creating a back-up incase the strike drags on further. The recent talks held between the striking workers and Maruti management failed yesterday, which caused the strike to enter the thirteenth day today.
One of the officials was quoted as saying that they will need to tweak their production strategy for meeting the current situation. They will need to re-visit their old plans when they were producing Swift at their Gurgaon plant, so that they produce cars over there. This will be like a back-up option for producing their popular models during this crisis.
They are discussing this alternative solution with their production and marketing teams is stemmed from the desire of the company of de-risking their operations in India, that account for 50% of their Japanese parent company, Suzuki’s operations in the global market.
An executive said that they now have to compulsorily develop a different production strategy so as to de-risk their operations in India. While the sales of cars are showing signs of slowing down, the demand for DZiRE and Swift diesel variants have increased. The halt in production is a challenge for them and their business associates as well.
Thought their facility in Gurgaon is operating at full capacity, they will continue exploring other possibilities to increase their production capacity at these plants. A spokesperson for the company was quoted as saying that the models, which are manufactured at their plant in Manesar are not possible to be shifted to their facility in Gurgaon for reasons that include long term and high costs, however they have not yet come to a decision on this yet.
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