Auto News

Idle Capacities Distress Car Manufacturers

By Motortrend India Staff   |   28 April,2009

Due to prevailing downturn in the industry, the car manufacturers are struggling to keep their facilities running. The grim export situation has worsened the business of many car manufacturers. They are experiencing a gloomy financial year.

According to an estimate by auto experts, big foreign car manufacturers have made nearly 5 billion U.S. dollars investments in India. Now only 60 percent of the total capacity at manufacturing centres is being utilized.

While all car manufacturers are facing problem, the worst hit are Honda Siel Cars, Ford Motor India, General Motors and Mahindra-Renault. Big players like Hyundai Motor India and Maruti Suzuki are also affected by the slowdown but only marginally.

The Indian car market was expected to touch 2.5 million units in the next fiscal of 2009-2010. But the slowdown has affected the earlier predicted targets and the sales are likely to fall by half-a-million units.

While the combined capacity of plants is 30 lakh units, only 18.38 lakh cars were manufactured in the year 2009. The Indian arm of the terminally sick General Motors of U.S. has been the worst performer in the country with only a fourth of the total capacity being utilized in the year 2009. General Motors has two plants- the small Halol plant that is utilized for production of big cars and the Talegaon plant which manufactures small cars like the Chevrolet Spark.

General Motors India CEO, Mr. Karl Slym said, "The company is launching two new car - a compact hatchback and the Chevrolet Cruze, to enhance the production utilization."

Even the French-Indian joint venture Mahindra-Renault which manufactures the sedan Logan failed to utilize its production capacities completely. The company has officially announced to launch two new models, the details of which are awaited. Mahindra Renault was able to manufacture only 14,404 cars as against the full capacity of 50,000 cars.

Fringe player like Ford is also pinched by the economic slowdown. Ford sold only 26,685 cars in India against the full capacity of 1 lakh units annually. But the company is still optimistic and plans to launch the new version of the Ford Ikon. It plans to further increase the plant capacity to 2 lakh cars per annum.

Overall, car sales grew by only 0.13 percent leaving many car manufacturers amid financial crisis.

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