Companies to power up production capacity for festive season by 20 per cent

Maruti Suzuki, Hyundai, Tata, Toyota, Mahindra & Mahindra (M&M) and others have already started running plants at full capacity, a month earlier than usual, expecting to clock record festive sales on the back of easing of supplies, executives said.

In electronics, brands and contract manufacturers said festive season production will hit peak capacity by early September. Unsold inventory is back to normal for electronic products such as smartphones, televisions, refrigerators and washing machines.

This comes after an improvement in demand in July and August, which led to companies scaling up factory output.
Onam sales in Kerala have also started on a good note, growing by 30% for automobiles from last year, executives said.”The festive season has begun with good growth during Onam in Kerala,” said Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki. “With the biggest bottleneck of semiconductor shortage easing, we are working on ramping up production to reduce waiting period on models which are in high demand like Brezza, Ertiga, XL6, Fronx and Jimny.” The company has pending orders for 342,000 vehicles.Onam marks the start of the festive season that reaches a high with Diwali, running from the third week of August to about mid-November, and then going on to Christmas and New Year.The festive season order book is picking up for televisions and washing machines, while it is upbeat for smartphones and on a “real high” for wearables, said Atul Lall, managing director of Dixon Technologies, one of India’s largest electronics contract manufacturers.

“We expect high double-digit growth in festive season orders over last year,” he said. “We are optimistic since brands are building inventory.”

Chief executives have already projected demand to improve in this year’s festive season, including for entry-level products that have been languishing since the Covid pandemic.

Passenger vehicle makers increased production by 18.4% to 393,094 units in July from June. Production at market leader Maruti Suzuki went up by 37%, while it was up by 15% and 3% at M&M and Hyundai, respectively.

“We are working on ramping up production to reduce the waiting period and hasten deliveries during the festive season but fresh bookings remain strong, adding on to the backlog,” said a senior M&M executive who didn’t want to be identified.

In electronics, companies had resorted to production cuts in June-July due to high unsold inventory. However, sales have improved sequentially since July.

Godrej Appliances business head Kamal Nandi said August sales have grown by 18-20% over last year with robust Independence Day sales. “Trade inventory level has come down. Hence, production will be scaled to full capacity from 70% till now,” he said.

Smartphone industry researcher Counterpoint’s research director Tarun Pathak said most brands are being conservative, even though sales have been improving since July, after they burnt their fingers in 2022 with high festive season inventory.

“But brands like Apple, Samsung and OnePlus will bolster their premium portfolio production and supplies by 15-20% in the run-up to the festive season over last year since demand in this segment is extremely buoyant,” he said.