China virus outbreak threatens to hit transition to BS-VI norms2 min read . Updated: 25 Feb 2020, 12:03 AM IST
- 2-wheeler, diesel vehicle makers may face supply issues as BS-VI engine parts are imported from China
- Many auto firms are now searching for alternative sources for BS-VI components
The coronavirus outbreak in China threatens to upset the Bharat Stage-VI transition plans of the Indian automobile sector—particularly makers of diesel vehicles and two-wheelers—several industry executives said.
Automobile parts, such as catalytic converters, particulate filters and fuel injection systems, which are integral to a BS-VI engine, are directly or indirectly imported from China and the virus outbreak could disrupt the supply chain.
Companies, including Tata Motors Ltd, Mahindra and Mahindra Ltd, Hyundai Motor India Ltd, Kia Motors India Ltd, Hero MotoCorp Ltd, TVS Motor Co. and others in the segment, are likely to witness a production cut, as manufacturing activity in China and in some parts of South Korea has been affected, said four people aware of the development.
Most of the above-mentioned vehicle manufacturers are now searching for alternative sources for the BS-VI components, which is likely to take some time. Tata Motors has already informed its stakeholders about a possible production hit while it looks for alternatives. South Korean vehicle manufacturer Hyundai is also expected to reduce production as its plants in Korea have shut down.
Automakers have to shift to the new emission norms by 31 March, but most diesel vehicle makers are yet to upgrade their products due to a shortage of BS-VI fuel. On the other hand, manufacturers of components, such as Continental AG and Bosch, mostly import the parts from China and other countries. Hence, HeroMotoCorp and Chennai-based TVS Motor have guided for a 10% cut in production during the current month.
“To minimize the impact on production of BS-VI vehicles, we are consistently monitoring developments with those of our suppliers who are sourcing certain components from China. Parallelly, we are also exploring suppliers in other regions and are looking to localise within India," said K.N. Radhakrishnan, director and chief executive, TVS Motor, in a statement issued on Monday.
Apart from BS-VI-compliant vehicles, some vehicle manufacturers are also facing disruption in manufacturing BS-IV diesel vehicles.
Most manufacturers in the Indian market will be directly or indirectly impacted by the shutdown in China, but the lack of engine parts is likely to slowdown the production of BS-VI compliant products.
Mahindra and Mahindra Ltd and Kia Motors India did not respond to email queries sent on 20 February, regarding the impact on the production of diesel vehicles.
“Hyundai Motor India Ltd has smooth product operations as per business plans, and has not seen any impact as of now. As a matter of prudence, the situation is being monitored closely, and any necessary action may be taken as per the market situation," said a Hyundai spokesperson.
In an emailed response, a Tata Motors spokeswoman said the company will not be able to respond on the developments.
Diesel vehicle manufacturers could not roll out their products earlier since BS-VI grade fuel wasn’t available across the country. Hence, most of them waited till the last quarter of the fiscal year to launch the diesel engine variants of their products.
Several stakeholders in the know said Europe, Japan and Thailand are stepping in to fill in the vacuum caused by production shortage in China. Two wheeler makers, such as Hero MotoCorp and Royal Enfield, have shifted procurement of EFI systems to a Japanese supplier.