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Tata Motors Cuts Production By 33% As Demand Drops
The production cut has not been made public but Tata Motors has asked its parts suppliers to reduce output to match production. According to reports Tata Motors has reduced production of most passenger cars including the Nano small car. It is expected to produce just 12,000 cars this September as against the 17,841 units it produced in September 2010.
The production cut is a clear indication of the decline in car sales this year. Increased interest rates and petrol prices have dampened customer sentiment and even discounts and special offers are no working. In such an environment, having a bloated inventory is the worst possible situation for the carmaker as well as the dealer. Considering these facts, Tata Motors has decided to cut production rather than face the risk of clogging inventories.
One of the biggest losers in terms of production will be Tata Group chairman Ratan Tata's pet car, the Nano. Nano's sales in August fell a staggering 65 per cent and demand is not improving despite several marketing strategies.
Sales of its hatchbacks such as Indica, Vista and entry level sedan Indigo have also not been very encouraging. Only larger cars, which incidentally do not have large sales volumes are showing signs of improvement. Sales of the Aria, Sumo Grande and Safari have increased consistently since April.
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