Tata Motors, one of the largest automobile manufacturer in India, has announced closing of the Jamshedpur plant owing to a demand slump. A company spokesperson said, "About 95 per cent of commercial vehicles are purchased through financing. While we do not declare production rates, unavailability of finance, coupled with high interest rates, is forcing customers to postpone purchases."

Furthermore, this step is "to avoid build-up of inventory either in the company or with our dealers." Tata Motors commands a share of 64 per cent in the manufacturing of commercial vehicles, according to figures provided by the Society of Indian Automobile Manufacturers (SIAM).

In October, the company reported 29 per cent decline in commercial vehicles sales at 19,154 units, against 27,103 units in the same month last year.

Even though the slump has affected nearly all vehicle manufacturers, Eicher Motors, India's fourth largest CV maker has clarified that it will not shut down or reduce working hours at its plant based in Pithampur, but will moderate production to suit demand.

Chennai-based Ashok Leyland has not taken a decision yet on suspending production at its manufacturing facilities. UK-based Jaguar Land Rover (JLR) said it was extending its voluntary redundancy offer scheme .Three weeks ago; around 198 hourly-paid staff took voluntary redundancies. This time, around 400 more are expected to accept the scheme, taking the total number of jobs shed to 600.

Standard & Poor's Ratings Services stated that the negative rating outlook on Tata Motors reflects deteriorating market conditions in the US and Europe, weakening domestic market demand slowdown in the vehicle loan securitization market and capital expenditure, resulting in weakening of the company's financial profile.