Automakers see production delays after lockdown ends
2 min read 16 Apr 2020, 05:54 PM ISTSupply chain disruptions due to covid and govt curbs are unlikely to subside any time soonLockdown effect is being felt across segments that include vendor ops and retail network
PremiumMUMBAI : Battered by the outbreak of covid-19, India’s automakers are staring at an uncertain future, unsure when they would be able to reopen their factories closed for nearly a month.
With the pandemic and stringent government curbs snapping widespread supply chain networks, it is unlikely that the industry will be able to straight away resume normal operations even if the government lifts the nationwide lockdown on 3 May.
Several automakers, including Renault Nissan Automotive India Pvt. Ltd, FCA India Automobiles Pvt. Ltd and Isuzu Motors India Pvt. Ltd would prefer to wait a little longer before they reopen their plants.
Others who have similar plans include Piaggio Vehicles Pvt. Ltd, India Yamaha Motor Pvt. Ltd and Harley-Davidson Motor Co. India Pvt. Ltd.
The impact of the prolonged shutdown is being felt across segments that include vendor operations and retail network.
Some top manufacturers such as Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Hero MotoCorp Ltd, Honda Motorcycle & Scooter India Pvt. Ltd and Bajaj Auto Ltd have begun to monitor the readiness of their vendors for resuming supplies. There is, however, no clarity on when these companies would restart production.
In a letter dated 14 April, Chennai-based Renault Nissan has informed its suppliers that it plans to resume vehicle and powertrain production in June 2020, which will be at least a month after the lifting of the lockdown. The company, however, plans to resume production of components for exports and after sales in May.
“Subsequent to PM of India announcement, we are studying the hotspot districts to confirm the ramp up feasibility for all our suppliers," according to a company document, which was reviewed by Mint.
Yamaha said the original equipment manufacturers (OEMs) will take some time after the lockdown to start their operations.
“OEMs dependent on suppliers located in different states will have to follow respective notifications," said Sanjiv Paul, senior vice-president, India Yamaha Motor, in an email response.
Puneet Gupta, associate director at market research firm IHS Markit, said it would be a big challenge to roll out vehicles from factories especially for those companies who have a marginal share of the Indian car market.
“It is difficult to keep dealer, suppliers and other agencies engaged for small volumes. To minimize the losses, it will be a smart strategy for these (small) players to start only when they see demand in the market. This time even the parent companies may not be having sufficient resources as they would prioritize supporting their key markets first," he added.
Earlier this week, YS Guleria, director, marketing and sales, HMSI had told Mint that it is going to be a challenge to immediately start manufacturing operations. "There is a large pool of manpower that has to report back at work," he said.
Automotive as a sector is last in the line to function in isolation, Hetal Gandhi, director, Crisil Research told this publication over a call on Tuesday.
While the Society of Indian Automobile Manufacturers pegging the daily loss of the sector at ₹2,300 crore, Gandhi has warned that there may be no respite for auto makers even after April and May with sales volumes seen falling as much as 75% in the June quarter.
