Maruti Suzuki | Production at 3,714 vehicles in May 2020 against 1,51,188 vehicles in May 2019. (Image: WIkimedia)
Maruti Suzuki India Ltd is considering fewer shifts at its Gurugram and Manesar plants because of COVID-19 protocols, amid growing concerns that demand may fall if states persist with stringent restrictions to control the pandemic, company sources said.
Two sources told Moneycontrol that India’s largest auto maker had let go of some contracted staff. An official said that while the number of shifts needs to be reduced because of COVID-19 protocols, the company would be able to meet demand.
The company did not respond to emailed queries from Moneycontrol as it is in a silent period ahead of quarterly earnings,
Restrictions imposed by several states to control the pandemic, which scaled a new record of 3.14 lakh fresh cases on April 22, have forced many dealers to shut down, which can hit demand for its vehicles.
This week, Maruti Suzuki’s Chairman RC Bhargava had said demand would fall if there is a “prolonged shutdown”. Factories cannot run if dealerships are shut, he said.
Maruti Suzuki's Manesar plant manufactures models such as the Alto, Swift and Dzire, with an annual production capacity of 8,80,000 units. The Gurugram plant has a capacity of 7,00,000 units and manufactures models such as the Wagon R, Ertiga and Vitara Brezza.
Workers are concerned about the situation. “Many workers are asking to go back to their villages because they do not want to get stuck without any work again like last year,” another source from the company’s worker’s union said.
Maruti Suzuki’s Executive Director Shashank Srivastava had said that retails were hit in the states under lockdown currently but added that bookings could be done digitally.
“However, if the current restrictions/lockdowns go beyond the end of this month then the customer sentiments could be affected which in turn will have an adverse impact on the market,” Srivastava said earlier this week.
Several states including Maharashtra, Delhi, Rajasthan, Madhya Pradesh, and Chhattisgarh which account for about 30 percent of the passenger vehicle sales, have imposed several restrictions.
Hero MotoCorp Ltd has temporarily shut down operations at all its plant between April 22 and May 1. The pandemic has also impacted Tata Motors Ltd.
Last year, sales stopped and automobile plants were shut because of the prolonged lockdown. By October 2020, Maruti Suzuki ramped up capacity utilization at its plants to pre-pandemic levels.
In 2020-21, Maruti Suzuki reported a nearly 7% lower sales to its wholesales partners, mainly due to zero sales during the nationwide lockdown.
Observers say that Jan-Mar sales results of 2020-21 (Apr-Mar) will be better than expected, but the second wave may hit the industry.