There are increasing doubts about Maruti Suzuki's future as the leading carmaker in India following the violent events at the Manesar plant. The carmaker has already suffered material damage as well as financial losses due to the strike. But it is yet to asses the kind of damage the violent incidents has had on the psyche and morale of its workers.
There have been reports about Maruti Suzuki considering plans to move out of Manesar as it already has an alternative location in Gujarat. However the carmaker has made it clear that it has no intention of moving out of the Manesar plant. In fact it is preparing itself two begin operations in two new units inside the plant.
Whatever assurances Maruti Suzuki management can give about it continuing its operation in Manesar, we cannot discount the fact that the company is severely hurt by the recent events. The unruly workers have not only killed a senior executive but also wreaked havoc and fear in to the minds of executives. It is indeed a difficult task for the management to get its executives back at the Manesar plant and assure them of their safety while retaining the workers who could have been involved in the violence.
The carmaker is still assessing the situation and it is yet unclear when it will resume its operations at the plant. Maruti Suzuki's Manesar plant is possibly its most important plant is it builds its two best selling models - the Swift and the Swift DZire. Both these models account for more than 30,000 sales. If deliveries of these two cars are affected there is every possibility of buyers opting to buy other cars.
The carmaker is still dispatching cars built at the plant from its stockyard. However, Maruti Suzuki has not revealed for how long this stock will last. The stockyard currently as 26,000 units which will deplete quickly if production does not resume. The police who are investigating the July 18 violence have not given an all clear to resume operations.
The crisis could not have at a worse time for Maruti Suzuki. The carmaker is riding on the positive response to the Ertiga and the continued success of the Swift and Swift DZire. The recent strike and lockout has created negative vibes about the company's policies regarding its workers. Repeated worker issues have dented its image and if it loses sales due to the recent events, Maruti Suzuki's position on the top will be at risk.
Hyundai Motors, Maruti's closest competitor was quite a distance away a few years ago but it is no longer the case. Maruti's best selling car, the Alto is ageing and reports say the launch of the new 800cc car has been delayed by the violence. If Hyundai is able to take advantage of Maruti's problems, we could soon see a new numero uno among carmakers in India.