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Car companies rework strategy as demand overtakes output for new launches

By Motortrend India Staff   |   12 October,2011

Automobile companies, which have recently launched vehicles, have underestimated demand, fuelling lower production targets and a consequent increase in waiting periods. Demand for Mahindra XUV 500, diesel variants for Etios and Liva and the Honda Jazz have risen more than the production targets.

The XUV 500, launched last month, has booking orders of more than 7,000 units leading to a waiting period of 17-18 weeks. The utility vehicle major, which planned to produce 2,000 units a month, will scale up production to 3,000 units. “While we can ramp up capacity, it’s always more difficult to ramp up capacity at the supplier end. Every supplier has to increase capacity, only then can we increase production,” said Pawan Goenka, president, automotive sector, M&M.

M&M, which has also launched the XUV in South Africa, plans to defer its plan of taking the vehicle to other global markets till the situation improves in the domestic market. It has deferred new bookings from October 11.

This has been necessitated due to overwhelming response across Mumbai, Pune, Delhi, Bengaluru and Chennai. It has received over 8,000 bookings in 10 days. The priority is to expedite deliveries for existing bookings and hence a decision has been taken to not open up new cities immediately.

Toyota Kirloskar sold 6,000 units of Etios and Liva in September. But the company feels that it could have sold 2,000 units a month more but for production constraints. “We will see the share of diesel cars moving up from 45 percent to 60 percent from next month. With the new plant coming up, it will ease supplies,” said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar Motor.

The capacity constraints have led to a waiting period of over two months on Etios and Liva diesel cars. The Japanese auto major is enhancing production from 90,000 units to 1,00,000 units in the plant which makes Innova and Fortuner. In another plant, where Etios, Etios Liva and Corolla Altis are manufactured, production is being ramped up from 1,20,000 units to 2,10,000 units .

Honda Siel produces 600 Jazz a month and has an order backlog of more than 3,000 cars. “The shortage of a micro-chip which comes from a factory in the quake-hit North Japan has led to a waiting period of more than 4 - 5 months,” said Jnaneswar Sen, senior VP, “Sales & Marketing, Honda Siel. Supply constraints are likely to be resolved by the middle of November,” Sen said. The Jazz saw sales picking up after a price correction this year.

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