Indian Tata Motors adjusts output on slower sales

Indian Tata Motors adjusts output on slower sales
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First Published: Wed, Jun 06 2007. 01 31 PM IST
Updated: Wed, Jun 06 2007. 01 31 PM IST
Reuters
Mumbai: India’s Tata Motors Ltd. is adjusting its production of commercial vehicles, a company spokesman said on 6 June after its annual sales fell for two months as high interest rates hurt demand.
A local newspaper report said Tata Motors, India’s top bus and truck maker, planned to cut production at its plant in the western city of Pune and “bench” some 2,000 temporary workers.
Adjustments are being made in commercial vehicles production in line with market dynamics due to the impact of the high interest rate regime on retail sales and the company is initiating several actions in the domestic market so as to retain and improve market share.
Sales of Tata Motors’ commercial vehicles fell 0.3% in April from a year earlier and by nearly 6% in May.
Sales of its medium and heavy commercial vehicles, which are more vulnerable to the cyclical nature of the market, fell 17% in May from a year earlier, while sales of its light commercial vehicles rose 10% compared to a year earlier.
Other vehicle makers including Ashok Leyland Ltd. Mahindra and Mahindra Ltd. and top car maker Maruti Udyog Ltd. have also said that rising interest rates, the central bank has raised its key lending rate five times in 12 months could dent demand.
Tata Motors, which has a capacity to make about 300,000 commercial vehicles annually, has been working on reducing the cyclical impact on its business by improving exports and pushing its popular sub-1-tonne truck, Ace, as well as other new models.
It is building a new plant in the northern Uttarakhand state with an annual capacity of 250,000 units, largely for the Ace.
Tata Motors, which has nearly 60% of the market in India, posted a 39% rise in commercial vehicle sales in the fiscal year that ended in March.
Shares in Tata Motors, valued at $6.7 billion, have fallen by more than a fifth since the start of the year, compared to a 10 percent loss for the sector index and a gain of more than 5% in the benchmark.
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First Published: Wed, Jun 06 2007. 01 31 PM IST
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