With the sales growth rate in the negative, auto makers are witnessing a pile up of inventories and this might result in the production cut across the segments. According to a news report, auto industry is not only slated to post its slowest growth in ten years this fiscal might also look at production cuts ahead.

It was reported that the commercial vehicles industry, where Tata Motors and Ashok Leyland account for about 80% of volumes, faces the biggest challenge with inventories more than doubling in the last one and a half years. Carmakers are close behind with similar stock levels as petrol car sales are yet to pick up and even sales of diesel cars are slowing due to rising fuel prices. For two-wheeler makers, the fiscal has been volatile and inventories are already up to the brim, paving the way for discounting, a rare move in the segment.

Earlier reports had indicated that country's largest vehicle maker Tata Motors had halved production at its Jamshedpur plant and is reviewing its expansion plans as slowing economic growth has crimped demand for its medium and heavy commercial vehicles (CVs). The current downturn has forced Tata Motors to cut production by 30-50% at its plants in Jamshedpur and Lucknow.

According to a report from Society of Indian Automobile Manufacturers (SIAM), car sales will fall for the first time in 10 years this fiscal, after recording a 1.8% drop to 1.55 million units between April and December. SIAM was quoted as saying petrol car sales have been under pressure for most of the year, prompting industry majors such as Maruti Suzuki to cut production, but now the demand for diesel cars and utility vehicles have also started coming down as diesel prices have been increasing.