Commercial Vehicle Companies Resort to Production Cuts
Leading commercial vehicle makers in India like Tata Motors and Ashok Leyland are resorting to production cuts due to piling up of their inventory. The credit squeeze has not only affected the passenger car sales but also the commercial vehicle segment in India. Unavailability of finance, escalating interest rates, higher operating costs, etc. have led to a decline in demand for these commercial vehicles.
"The significant drop in volumes has been mainly in the medium and heavy commercial vehicle segment to the extent of 25 percent from August on a year-on-year basis. These levels are likely to continue for the next few months as economics for truck operators have changed," said Srivats Ram, Chairman of Auto Component Manufacturers Association for southern region and Managing Director, Wheels India.
Inventory built up for commercial vehicles as well as for component suppliers like tyre companies has gone up to as much as three months. This is specifically true for medium and heavy commercial vehicles. The passenger car sales has also been experiencing a slow down in demand since the past few months. However, car sales figures for the month of September have been a little better than those of July and August 2008. This has helped the dealers to clear their inventory as well.
[Via: cartradeindia]