Hyundai, Honda, Toyota are also in ramp-up mode

Automakers Hyundai, Honda Siel and Toyota Kirloskar, which had cut down production drastically due to the downturn and weak market sentiments, are in a rush to step up production as the festive season ensues.

Honda Siel, which has been operating on a single shift since last year, will start operating on double shift from next month and increase production by 50% for its Jazz and other cars. “We are facing delivery constraints, adding on to our backlog. Honda City, which constitutes close to 70% of our total sales volumes, has a backlog of three weeks,” Jnaneswar Sen, vice-president (marketing), Honda Seil Cars India said.

The company, which had seen sales drop from 60,000 units in 2007-08 to 55,000 units in 2008-09, can produce 5,000 units a month working on a single shift.

Hyundai Motor India will also add a shift in its Plant 2, where the i20 is manufactured, from September 14. Currently, the company produces 1,000 units per day and will be adding 500 units more, a company spokesperson said.

Plant 1, where the i10 and Verna are manufactured, has been operating in three shifts since July. Total capacity in this plant is 1,500 units per day.  

Toyota Kirloskar Motors too is on the production ramp-up mode. Sandeep Singh, deputy managing director, said, “We were operating at very low levels, around 3,000 units per month, but now, since things have started to look up, we have been gradually increasing production levels as Innova and Corolla have a waiting period of three weeks. For the month of August, our production is at 5,000 units and this will go up to 5,500 units September onwards.”

Mahantesh Sabarad, an analyst with domestic research firm Centrum Capital, has a cautious view on the dramatic rise in production levels. “This situation is not a very comfortable one as it will lead to an inventory pile-up once the festive season is over and the companies would have to shell out huge discounts in order to dispose of the inventory in the March quarter.

Also, looking at the rate at which the government borrowings are going, the interest rates will be inching up soon, affecting finance once again. Due to this, November-December will see a classic collapse as the festival season as started early this year, to add to this the deficient monsoon will play the dampener.”