Car manufacturers unable to meet orders, ask buyers to wait

Car manufacturers unable to meet orders, ask buyers to wait
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First Published: Sun, Oct 18 2009. 10 58 PM IST

Steady pace: A Maruti production plant in Manesar. Car sales rose by one-fifth last month and analysts expect it to continue in October. Ramesh Pathania / Mint
Steady pace: A Maruti production plant in Manesar. Car sales rose by one-fifth last month and analysts expect it to continue in October. Ramesh Pathania / Mint
Updated: Sun, Oct 18 2009. 10 58 PM IST
New Delhi: A sudden and unexpected jump in demand for cars in the lead-up to the festive season has resulted in several popular models being placed on the waiting list.
MarutiSuzuki India Ltd, the country’s largest car maker, says it expects this situation to continue for the next few months at least, indicating a strong and sustained recovery for the auto sector.
Steady pace: A Maruti production plant in Manesar. Car sales rose by one-fifth last month and analysts expect it to continue in October. Ramesh Pathania / Mint
“Domestic demand would remain strong for the next six months,” said Shashank Srivastava, chief general manager, Maruti Suzuki. This is likely to result in waiting periods for models such as the A-Star, Ritz, Swift and the Swift Dzire continuing well beyond the festive season, he added.
Auto makers who had been caught by surprise by the sudden dip in demand in the last festive season had been cautious about ramping up production this time around.
Several companies found themselves without enough staff to handle surging demand as they had laid off the majority of their contract employees.
Car sales rose by one-fifth last month and analysts expect them to continue on the same track in October. While the numbers may look better than normal due to the base effect, when muted growth in one year makes next year’s numbers look better, analysts say the overall growth trend is hard to miss. “Everyone was expecting demand to pick up gradually but it has been rather sudden,” said Vaishali Jajoo, an auto analyst at brokerage Angel Broking Pvt. Ltd.
While auto makers such as Hyundai Motor India Ltd have added a third shift, others such as Honda Siel Cars India Pvt. Ltd and General Motors India Pvt. Ltd are watchful about raising production.
Honda continues with a two-shift operation producing about 300 cars a day at its plant in Greater Noida, according to a spokesperson. The company has asked customers to be prepared to wait for six weeks for delivery of its popular City model and four weeks for the Civic.
However, the company does expect a lessening of demand after Diwali.
Skoda Auto India Pvt. Ltd, which makes high-end sedans such as the Superb, has also seen wait times increase. Prospective Superb buyers have been asked to wait between eight and 10 weeks for delivery.
“Overall demand will continue to move up,” said Ashutosh Dixit, senior general manager, sales and network development at Skoda Auto India. He declined to speculate on demand after the festive season.
Waiting periods for Maruti’s cars are also a result of manufacturing constraints.
Its two plants and Gurgaon and Manesar are producing flat out and the company is currently in the midst of meeting its export commitment of 100,000 A-Star cars for the European market.
Rising demand for the company’s cars has not gone unnoticed by the markets.
Its stock price closed at Rs1,520.55 last week on the Bombay Stock Exchange, up 193.4% this year. In the same time the Sensex has risen around 80%, while the BSE Auto Index has risen 171%.
samar.s@livemint.com
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First Published: Sun, Oct 18 2009. 10 58 PM IST
More Topics: Car manufacturers | Maruti | Hyundai | Honda | Skoda |