To improve profits, carmakers switch to ‘Built to Order’ model

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Giving in to sluggish sales and weak demand of certain models, car manufacturers have now started following the ‘Built to order’ model to improve profits during hard times. According to pundits, more and more companies are resorting to the BOT format and only manufacturing variants of vehicles based on confirmed bookings. “This practice helps the OEMs in minimising the inventory while focusing on the real product mix. This approach is considered for highly configured products such as automobiles,” said Amit Kaushik, principal analyst, autos, at consultancy firm IHS Automotive.


Maruti Suzuki had started the practice long ago for its solitary sport-utility vehicle Gypsy which was made at its Gurgaon plant. The company manufacturers the SUV only after confirmed bookings from customers who also need to make a hefty deposit. Honda is believed to have switched over to the BOT format for its CR-V, as the demand for the SUV is not so high in India and it managed to sell just 322 units this fiscal year. The company has kept the model off-line as it used its production lines to make the highly popular City and Amaze sedans. Commercial vehicle-maker Ashok Leyland has also adopted the BOT format for its newly launched truck models Boss and Captain . The weak Indian commercial vehicle market sales have fallen year-overyear every month for two-and-half years has forced manufacturers to switch to more efficient modes to reduce costs. Commercial vehicle-makers such as Tata Motors and Eicher Motors said they have also restructured manufacturing practices.

Source: ET

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