Hit by unexpectedly low sales, LG Electronics India Pvt Ltd has cut its production of air-conditioners (AC) by at least 30 per cent.
Since April 15, the company is operating on a single shift at its Greater Noida and Pune manufacturing facilities. LG was previously operating on two shifts at both the plants.
The decision to reduce production comes after the company failed to meet its targets for April.
As against targeted sales of 2.4 lakh ACs, LG could sell 83,000 units, about one-third of the target, till early this week.
April is considered as the peak month for AC sales. However, according to Mr Amitabh Tiwari, Head, Sales, LG has witnessed a drop of 18 per cent in sales so far during the month. The corresponding industry sales were down by 15 per cent.
“Currently we are operating on a single shift for manufacturing ACs. We are hopeful that sales will pick up in May,” Mr Tiwari said.
Since April 15, LG is producing around 7,000 units from its two manufacturing plants. Earlier, the company was producing around 13,000 units daily. The company has a production capacity of 14 lakh units while operating on a double shift.
LG, with a 29 per cent market share, is the currently the leader in AC segment.
NO PRICE CUTS
Ruling out any immediate price cuts, Mr Tiwari maintained that the move would not bode well for its dealers. Dealers who have already purchased ACs at an increased price would suffer huge losses if prices go down.
LG and some other AC-makers had hiked prices following a rise in input costs. LG had hiked prices first in November 2010 and later in January 2011.
Mr Tiwari added that the company will focus on its marketing strategies and support trade partners. Support programmes will include advertisements and new offers.
The company was also mulling options to introduce gift schemes for its dealers, company officials said.