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Bajaj Auto slows production as sales fall, inventory piles up

Bajaj Auto slows production as sales fall, inventory piles up
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First Published: Fri, Nov 07 2008. 10 35 PM IST
Updated: Fri, Nov 07 2008. 10 35 PM IST
Pune: The country’s second-largest motorcycle maker, Bajaj Auto Ltd, is shutting production of motorcycles at its Aurangabad plant in Maharashtra for two days this month because of a sluggish demand and an inventory pile-up, a business associate familiar with the development said.
The company has also cut production at two other plants, Pantnagar in Uttarakhand and Chakan, near Pune, the business associate added.
This person, who didn’t want to be named as he is not authorized to speak on the subject, said the move followed slower sales during the October festive season, when vehicle sales typically peak. Bajaj Auto logged a 34% decline in motorcycle sales in October.
“There is a pile-up of some 50,000 vehicles across all three locations, and it does not make sense to produce more when demand is actually expected to be low for the next 2 months at least,” this person said, adding that the shutdown is scheduled for 9 and 16 November, both of which are Sundays. Typically, the unit operates on all days of the week.
Two other business associates, who also did not wish to be named, confirmed the development.
Bajaj Auto managing director Rajiv Bajaj said he was not aware of any planned shutdown of the motorcycle division in Aurangabad.
At the Aurangabad plant, which manufactures the Platina, XCD, Kristal and Discover motorcycles, production declined from 2,000-2,500 units per day in the previous six months to around 1,500 per day in October.
The plant has an inventory of around 18,000 units, another person said. He also didn’t want to be identified.
Bajaj Auto and other auto makers are hurting as economic growth slows and high borrowing costs and tight bank lending deter buyers.
On Wednesday, Tata Motors Ltd, the country’s largest commercial vehicle maker, said it would shut production at its Jamshedpur facility for three days ending Saturday because of slowing demand.
In a statement to the Bombay Stock Exchange on Friday, referring to news about a shutdown at its Pune plant as well, Tata Motors said it adjusts production to meet demand.
A temporary shutdown of its Pune plant would be one measure to avoid unnecessary inventory build-up, Tata Motors said. The passenger car plant is working normally, it added.
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First Published: Fri, Nov 07 2008. 10 35 PM IST