Top Indian automakers plan production cuts amid industry downturn

The slowdown in the sector has also triggered massive job cuts

Workers assembling a Tata Tiago car inside the plant in Sanand, on the outskirts of Ahmedabad city in Gujarat. Reuters

Indian automakers Tata Motors and Mahindra and Mahindra said on Friday they would cut production at some plants in response to slowing demand that industry executives say has driven the sector into one of its worst downturns.

Tata Motors, which had previously flagged a “challenging external environment”, said it closed some blocks at its Pune plant in the western state of Maharashtra.

The company, India's top automaker by revenue, had last month posted a bigger-than-expected quarterly loss due to weak conditions at home and problems at its British luxury car unit.

M&M said on Friday its automotive segment, which makes passenger and commercial vehicles and spare parts, would cut production for 8-14 days at various plants during the second quarter.

Shares of Tata Motors and M&M fell between 1.8 per cent and 2.4 per cent before cutting losses in a broader Mumbai stock market.

The slowdown in the sector has triggered massive job cuts, with initial estimates suggesting that automakers, parts manufacturers and dealers have laid off about 350,000 workers since April, a senior industry source told earlier this week.

The crisis has also hit smaller auto parts makers like Jamna Auto Industries. The company, whose customers include Tata Motors, General Motors and Toyota Motor, said on Thursday it might shut all its nine plants in August due to weak demand.

"In view of the weak customer schedule and high inventory, the company has made changes in production schedule at all its plants. The plants may not run or partially run on all working days in August," Jamna Auto said.

Jamna Auto's shares fell as much as 8.5 per cent on Friday.

Auto components manufacturers Bosch and Wabco India have already trimmed production amid the demand slump.