Toyota Kirloskar Motors (TKM), the Indian subsidiary of Japanese auto major Toyota Motor Corporation, has increased its production volumes after have cut down inventories during the last four months.
TKM had cut down production at its vehicle manufacturing facility in Bidadi near Bangalore during November-December period last year as a result of a dip in sales following the slowdown in the Indian auto industry.
“The company had reduced its production to 70-80 vehicles per day during the November-December period in 2008, from earlier production levels of 180-200 units per day,” Shekar Viswanathan, deputy managing director (commercial), TKM, said. Toyota holds 89% stake in TKM, while the remaining 11% is owned by the Kirloskar Group.
Viswanathan said that after having cleared a sizeable amount of inventories, the company “has again increased production to 140 vehicles per day”.
Inventory pile up in the factory and at dealerships during the third quarter of 2008 had led the company to trim production, a Toyota dealer said.
Buoyed by 2007 sales 2007 and increased customer footprints at its 82 dealerships across the country, the company had piled up inventories, anticipating higher sales growth in 2008, company sources said.
It had set a sales target of 60,000 units for 2008, against 54,181 units sold in 2007. However, given the sudden fall in sales in the last four months of 2008 affected the company. Overall, sales fell 4.4% at 51,803 units in 2008.
The decision regarding a cut in production was taken in November, when sales tumbled alarmingly. TKM had reported a dip of 48.55% in November sales at 2,087 units, company sources added.
Although Toyota had trimmed its production in the tail-end months of 2008, it had not cut down shift schedules. The company maintained two-shift production system at its Bidadi plant, Viswanathan said.
“Currently, we have limited the number of vehicles being produced on per-day basis; that way, the company won’t have any inventory build up,” he said.
In addition, the company has also taken steps to cut down contract labour workforce. “It’s not that we have expelled anyone from the company,” he said, adding that the company is discontinuing the service of contract labourers as and when their contracts expire.