Maruti Suzuki, Hero MotoCorp step on the gas on lower excise duty

Mar 24 2014, 09:46 IST
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Maruti Suzuki, Hero MotoCorp are hoping to push sales during the festive Navratras and are therefore readying inventories. Reuters Maruti Suzuki, Hero MotoCorp are hoping to push sales during the festive Navratras and are therefore readying inventories. Reuters
SummaryMaruti Suzuki, Hero MotoCorp are hoping to push sales during the Navratras and are readying inventories.

Maruti Suzuki India and * Hero MotoCorp plan to increase production of cars and two-wheelers respectively in April and May to make the most of the prevailing lower excise duty. Among the country’s largest auto manufacturers, they’re hoping to push sales during the festive Navratras that begin in early April and are therefore readying inventories.

Maruti Suzuki has upped the output guidance to key component suppliers for April and May by 8% — from 1 lakh to 1.08 lakh units — and 12% — 1.04 lakh to 1.17 lakh units — at its two plants in Haryana, although it did not alter production plans for March. This is higher than the production guidance given before the interim budget announced in February. The country’s biggest car manufacturer has, however, not made changes to its June production targets since the excise duty cut is available only till end June.

Hero MotoCorp hopes to make around 6 lakh units this month, more than the regular scheduled monthly output of around 5.5 lakh units, to sell both overseas and in the rural markets at home, given the likelihood of a good harvest. “Hero usually gives vendors a month’s notice. Usually it produces 5.5-5.6 lakh units but March could see more bikes and scooters being manufactured as the company is hoping for bigger sales in the next couple of months,” a key supplier to several top auto companies said.

“Maruti has not been able to raise production in March because it needs to give at least a month’s notice to suppliers. Given the strong demand for the Celerio, it hopes to push sales to cash in on the lower excise duty,” an industry source in the know said.

Added a company source, “Higher production in April and May will also help raise inventories for June and July. In June, there is a maintenance shutdown for a week, so we need to have adequate stocks.”

Anil Dua, senior vice-president (marketing & sales), Hero MotoCorp, said prices had trended down in February after the excise duty drop and should boost demand. Dua declined to share any guidance on monthly sales but said his firm had been regularly selling over 5 lakh units a month and was looking at strengthening its leadership position.

Other car and two-wheeler makers also expect strong sales in coming months. Honda Cars India, which recently commissioned its second plant in Tapukara,

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