Maruti to cut cost, production as demand falls

22 November 2008

Maruti Suzuki India will produce fewer cars and cut production cost by 5 per cent for all its cars in the face of the global economic meltdown, in order to maintain the 2.5 per cent sales growth it achieved in the first half of FY09.

The company will also make lesser number of cars in the face of a demand slowdown. Production will now be 4.5 per cent more than last year's compared with an initial target of a 10 per cent increase. The company produced 757,092 cars, vans and utility vehicles in the year ended March 31.

Maruti Suzuki's sales fell 7 per cent in October. Totally passenger car sales in the country have declined in three of the past four months as banks tightened lending. Overall sales fell 6.6 per cent in October, the highest in more than three years.

The company is working with its vendors to reduce supplier costs in order to cuts production costs.

Maruti's Gurgaon and Manesar plant together can roll out 9.4 lakh cars a year.

Maruti's managing executive officer MM Singh said the company has taken a special drive to cut production of cars and was also constantly reviewing production to bring down wastage. At the same time, it was looking into the systems of its suppliers to bring down their costs too.