India's leading carmaker Maruti Suzuki reported on September 02 a 13 percent drop in monthly sales in August, blaming the fall on industrial action at one of its plants in the country's north. The Japanese-controlled firm sold a total of 91,442 vehicles last month, down from 104,791 in the same period last year.
"The disruption in production at the company's Manesar plant in Haryana state in end August impacted the sales numbers during the month," it said. Maruti Suzuki shares were down nearly 1.5 percent in afternoon trade after the announcement, which comes amid a wider slowdown in monthly car sales due to sustained high inflation and high interest rates.
The Manesar factory, which produces the mini A-Star, compact Swift and mid-size SX4 cars, has been hit by labour unrest for three straight months. This week, management locked out workers until they signed a "good conduct" bond after accusing them of sabotaging cars on the assembly line.
Production was halted August 26 and only partially resumed on August 28 with the help of hastily-recruited contract workers. In June, 11 days of production was lost at a cost of nearly $93 million after workers downed tools when the company refused to recognise a new union and demanded reinstatement of dismissed workers.
The following month, production was again halted for a day due to a labour dispute at the plant. The company is planning to bring forward the launch of its second plant at Manesar to deal with the production deadlock at its other plant, the Economic Times newspaper reported. The company has a third plant in nearby Gurgaon, outside the Indian capital, which has been unaffected by the unrest.
Maruti now hopes production will start at the new 250,000-unit Manesar plant in a couple of days rather than at the end of the month, the newspaper said. It quoted an unnamed senior company executive as saying: "Our engineers are working day and night to bring the second plant on stream." A Maruti spokesman could not immediately be reached for comment.
Maruti posted its sharpest-ever year-on-year fall in monthly sales in July - 25.3 percent - again blaming labour unrest and the wider economy. Elsewhere, Tata Motors saw monthly sales in August fall 2.84 percent year-on-year to 64,078 units, while sales of its flagship small car, the Nano, slumped by a massive 85 percent to just 1,202.