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2 minutes read

Tata Motors, Ashok Leyland Are Shutting Down Their Factories. See Why

| Published on July 16, 2019

The automobile sector is considered as one of the important sectors in the Indian Economy, because it contributes to a large portion of the economy. But this time, the statistics show a downward curve of the trend.

Downfall by 25 percent!

June has been the worst month for the Indian automobile sector, where the overall sales were down by 25 percent, out of which, the sales of consumer vehicle saw a downfall of 12 percent.

Dismal Numbers of June

1. Medium and Heavy Duty trucks: sales of only 21512 units, which resulted in a decline of 19 percent in sales.

2. Medium and Heavy Duty commercial vehicles: encountered the worst sales with only 64000 units, resulting to a sharp decline of 19 percent.

3. Domestic Passenger Vehicle: sales decreased to 2.25 lakh units, resulting to a decline of 17.54 percent in sales.

4. Domestic Cars: sales of only 1.39 lakh units, resulting in a decline of 24.9 percent in sales volume.

The Chain Reaction

The crisis has triggered a chain reaction among the leading automobile manufacturers of India, with Tata Motors and Ashok Leyland shutting down their factories due to low sales.

At present, the shut-down is temporary. Tata Motors has shut down their factory in Pantnagar for 2 days, July 13 and July 22. Ashok Leyland has, on the contrary, shut down their factory in Pantnagar, for straight 12 days, from July 12 to July 23.

Reason for shut-down

Tata Motors’ sales were down by 19 percent in the month of June, with only 9358 units of sale. Whereas, Ashok Leyland’s sales showed numbers of 8123 units, amounting to a decline of 23 percent, in the same month.

The shut-down was focused on avoiding the pile-up of inventory and the reduction of the unsold units.

While “optimum utilization and effective productivity” was the reason mentioned by Tata Motors for observing the block closure for two days, there was no reason mentioned by Ashok Leyland for their shut down.

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