Demonetisation Effect: Indian Auto Industry Cuts Production

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Car and truck manufacturers are about to slash production as demonetisation led to a massive in sales and hit footfalls at showrooms. The government announced the demonetisation of Rs 500 and Rs 1000 on November 8.

Due to this announcement of the demonetisation of high-value currencies, the demand for automobiles has been dropped. In some cases, the drop is a significant 65 percent. This impact is forcing automotive companies to cut down production or introduce block leave (no production days).

According to a report, Daimler AG has gone in for a block leave for three days last week. The company also has planned to do the same this week also. Others like Renault and Nissan is stopping production of cars on the third shift in Oragadam factories.

Erich Nesselhauf, Daimler India Commercial Vehicles told TOI, "As a matter of principle at Daimler worldwide, we do not publicly discuss our production planning.

"In general terms, our production always follows anticipated market development, which we are currently observing with special scrutiny."

Renault and Nissan's officials said that they have announced the stopping of third shift for this week. Sources said, "While we have termed it internally for maintenance, you can derive if maintenance work happens at factories only for the night shift."

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