Truck companies cut production

Automotive dealers body — FADA estimates the current Truck inventory levels in commercial vehicles at 45-50 days and dealers are pushing for lower stock levels prompting production cuts.

Chennai: Truck companies are cutting production and synchronising their assembly lines for reduced demand. Truck makers including Ashok Leyland, Tata Motors, Volvo Eicher Commercial Vehicles (VECV) to Daimler India Commercial Vehicles (DICV) are reducing the number of shifts or taking a production day off to better manage inventory at dealerships and factory gates.

Now, truck companies cut production to manage stocks

On Thursday, Ashok Leyland announced that it would halt production at its Pantnagar factory for 6 days — from June 24 to 29. Earlier it had indicated it would stop production on 2 days in June — 17 and 24.

At Volvo production has been cut by a third.

“Our inventory levels are 3 weeks with the dealers and 3 weeks with us. We are producing in line with demand like last month we cut down from 3 to 2 shifts. Normally our capacity is 7,500 per month but last month we produced around 5000 and sold 5000 units,” said Vinod Aggarwal, managing director & chief executive officer, VECV.

Automotive dealers body — FADA estimates the current inventory levels in commercial vehicles at 45-50 days and dealers are pushing for lower stock levels prompting production cuts. The ideal level of inventory should be 21 days, according to FADA.

Tata Motors announced last month that the slowdown has prompted it to cut production by 10,000-15,000 units.

The company which normally produces 40,000-45,000 units of commercial vehicles a month brought it down to 30,000 partly due to the slowdown and partly to control stock ahead of the industry migrating to BS6 in April 2020.

Meanwhile DICV, which has an installed capacity of 70,000 units, is also “trying to sync our production plans in line with the market,” said Satyakam Arya, managing director & chief executive officer, DICV.

“We know market will continue to be slow for June and July and August is any way a low sale month. By September, with half yearly closing, there could be some pre-buying starting off which could go on till early next year,” he added. Truck companies are already focusing on planning their production so there’s no BS4 stock available come April 2020.

“We have to start producing BS6 from Q4 and start selling BS6 from March 2020 onwards,” said Aggarwal. “The pre-buying should kick in from October.”

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