Maruti Suzuki adjusts vehicle production to reduce inventory

India's largest car maker Maruti Suzuki India Ltd is adjusting its production to ease rising inventories at dealerships amid a slowdown in the demand for passenger vehicles in the country.

""We are currently adjusting production [in India] to reduce market stock and are closely monitoring demand trends," the management of the automaker’s Japanese parent company, Suzuki Motor Corp told investors.

The comments came as the Federation of Automotive Dealers Association here has raised concerns over a pile-up of unsold cars at dealerships and has called on automakers to rationalize production.

Maruti Suzuki's domestic passenger vehicle dispatches to dealerships fell around 10% on year during July while its volume during the April-July period is almost down 2% from the year-ago period. The company noted that the demand has been weaker than expected this year.

"Retail sales in July (in India) have improved slightly compared to the level in April-June, and even in April-July, retail sales have reached about 3% increase year-on-year, but inventory adjustments are still needed," Suzuki Motor Corp management said.

Though Maruti Suzuki's production during the April-July period remains higher than the year-ago period, the company has hit brakes on the production from June. As per its monthly production data, output was lower in June and July.

The pile-up of unsold cars at dealerships has also resulted in higher discounts. Maruti Suzuki provided an average discount of Rs 21,700 per vehicle during the April-June period, up from Rs 14,500 in January-March.

Recently, Maruti Suzuki's Executive Director for Corporate Affairs Rahul Bharti said inventory levels are manageable, though it is slightly higher than optimal. He noted that 30 days of inventory is considered normal and the company had an inventory of 37 days at the end of June.

Read More: Maruti Suzuki says inventory ‘slightly higher, but manageable’