Ashok Leyland Ltd. will close its manufacturing plant in Pantnagar, Uttarakhand, for nine days from July 16 to July 24 because of weak demand for commercial vehicles in India.
The plant, which can manufacture 1.5 lakh units annually, was closed intermittently for around seven days between June 17 and June 29, said the company on Monday.
The decision to stop operation again comes at a time when the commercial vehicles industry is slowing down. Ashok Leyland 's competitor Tata Motors recently decided to close its Pantnagar facility for two days--July 13 and 22--for optimum line utilisation and effective productivity, according to sources.
The industry has been expecting scrappage policy and other favourable decisions to revive the demand.
"While the expected pre-buy in FY20 on account of introduction of BS VI from next year could provide the surge in demand in the second half of this year, it is important that the government and the industry bodies consultatively provide a long-term direction or a policy guideline to the auto sector that include policy pronouncements such as vehicle scrappage, cab code or bus body code," said ALL's annual report.
However, the Budget did not mention these policies, much to the disappointment to the industry.
According to Society of Indian Automobile Manufacturers (SIAM), the overall domestic Commercial Vehicles segment registered a decline of 9.53 per cent in April-June 2019 as compared to the same period last year.
Medium & Heavy Commercial Vehicles (M&HCVs) declined by 16.60 per cent and Light Commercial Vehicles declined by 5.06 per cent in April-June 2019 over the same period last year. Exports of Commercial Vehicles registered a de-growth of 52.41 percentin April-June 2019 over the same period last year, it said.
New regulatory rules, softer freight rates and a liquidity crunch at non-bank lenders (which finance half the CV sales) are among the reasons which impacted sales. The Federation of Automobile Dealers Associations (FADA) has earlier said that the average inventory for CV ranges from 45–50 days.