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Maruti Suzuki expects to produce more than 100,000 vehicles each month, starting July
Maruti Suzuki expects to produce more than 100,000 vehicles each month, starting July

Osamu Suzuki asks Maruti suppliers to build inventory fearing second covid wave

  • This is the first time in more than two decades the octogenarian has personally reached out to Maruti’s suppliers
  • Maruti is likely to manufacture around 30,000-40,000 vehicles in June and is likely to increase production of entry level hatchbacks in the coming months

NEW DELHI: Fearing a second wave of covid-19 infections in India, Suzuki Motor Corp chairman Osamu Suzuki has written to component suppliers of Maruti Suzuki India Ltd, asking them to ramp up production and build enough inventory to help the company regain production levels close to the pre-coronavirus period and avoid significant disruption in operations.

This is the first time in more than two decades the octogenarian has personally reached out to Maruti’s suppliers as ensuring profitability in such trying times is of paramount importance for Suzuki Motor Corp. The New Delhi-based subsidiary contributes more than 60% to Suzuki’s net profit and revenue.

In a letter to vendors in India on 17 June, Suzuki said “the lock down has been re-imposed in few cities and we are most concerned about the chaos/confusion again. Therefore, we request you to take necessary measures to be able to respond to production recovery plan after July and request you to build up enough inventories toward the preparation for the second wave of Covid-19 Virus bound to hit."

Mint has reviewed a copy of the letter.

Earlier this week, the Tamil Nadu government had decided to re-impose lockdown measures for twelve days starting 19 June. The southern state houses factories of automakers like Hyundai Motor India Ltd, Eicher Motors Ltd, Renault India Pvt Ltd and others, whose manufacturing operations are likely to be impacted. Some of Maruti’s component manufacturers are also based out of the state and the company is likely to face some impact on production.

“We at Maruti Suzuki (MSIL) also plan to build up the inventory of in house manufactured parts and gear up ourselves to avoid the same furrow. I am very sorry for making above request in a situation wherein everyone is passing through a tough time on account of corona impact but I would like to request you carefully consider the situation and seek your special cooperation," said Suzuki.

Mint, on 18 June, had reported that Maruti Suzuki expects to produce more than 100,000 vehicles each month, starting July, sharply higher than the 3,714 vehicles it produced in May, on hopes that sales of affordable, entry-level hatchbacks will rebound on the back of a faster revival in demand in semi-urban and rural markets.

The company is likely to manufacture around 30,000-40,000 vehicles in June and is likely to increase production of entry level hatchbacks in the coming months.

“In India, the spread of Covid-19 infection continues and it seems impossible to predict the end. In view of this, we are extremely worried about the serious impact of this on Indian economy. Although such circumstances prevail, we would like to inform you that we plan to produce monthly production of 100,000 or more vehicles after July same as that of previous year," Suzuki said.

A Maruti Suzuki spokesperson did not want to comment on a query sent through email on Thursday.

India’s passenger vehicle sales are expected to decline in the range of 22-25% this fiscal, owing to the coronavirus-induced economic slowdown, according to rating agency Crisil.

According to sector analysts, the local unit of Suzuki Motor Corp is expected to score a faster recovery from the current crisis, compared to its peers due to strong financials, vast network in semi-urban and rural areas, and a strong portfolio of entry-level cars.

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