Mumbai: Bajaj Auto Ltd, the No. 2 motorbike maker of the country, said on 29 August it would stop producing two-wheelers at a plant in western India from 1 September as it shifts production to a new plant in northern India.

Production at the plant in Akurdi in Maharashtra had been scaled back since Bajaj began production at another facility in the state and, more recently, at a factory in northern Uttarakhand state which can make 1 million units annually.

“The Akurdi plant is currently witness to a two-day shutdown and will, from 1 September, be completely shut down,” Bajaj Auto said in a statement.

“No vehicles will be produced at this plant. Component production for supplies to other plants will continue,” it said.

Bajaj Auto had earlier said the Akurdi plant was a high-cost unit and the tax structure in Maharashtra made it unviable, especially as the company receives fiscal benefits for the Uttarakhand plant.

A softening in consumer demand for motorbikes and scooters on the back of higher interest rates has led Bajaj to scale back its overall monthly production.

The company said no voluntary retirement scheme was planned, but it was discussing a wage settlement with the workers’ union in Akurdi.

“The management is hopeful ... an appropriate long-term solution can be arrived at quickly and amicably,” it said.

Bajaj Auto has target sales growth of 10% to 3 million units in the year ending March 2008.