Tamil Nadu govt’s move to impact plans of automakers

The lockdown measures announced by the state of government of Tami Nadu, in four districts including Chennai is expected to adversely impact the production operations of some automakers and their component manufacturers in the coming weeks. Most of the automakers restarted production in their manufacturing capacities from the first week of May, after the lockdown was eased across states.

Factories of leading vehicle manufacturers like Hyundai Motor India Ltd, Eicher Motors Ltd, Ford Motor India Pvt Ltd, Renault India Pvt Ltd, Nissan Motor India Pvt Ltd and others are based out the state. Hyundai Motor India – country’s second largest vehicle manufacturer – is likely to face the significant disruption in production as it was planning to ramp up production of its popular products Venue (a compact SUV) and Creta (mid-size SUV) in the coming weeks.

According to a senior industry executive, automakers are still trying to come to terms with the new reality and it is unlikely that they can continue to ramp up production as planned, since many of the supply chain ecosystem may not be able to function seamlessly after the lockdown is implemented.

“Along with Chennai, lockdown was imposed in the Kancheepuram district as well, where most of the factories are based. So, there will be an adverse impact of the lockdown on production. It’s still not known if some of the companies are going to stop production entirely since transportation of employees will be a problem,” said the executive requesting anonymity.

Car makers like Hyundai had to close their factories from March 22, following the lock down announced by the union and state governments to contain the spread of the Covid-19 pandemic. The companies though in the meantime were working with its suppliers to create standard operating procedures (SOP) that need to be followed once manufacturing starts.

Most of the vehicle manufacturers have been utilizing just 20% -30% of the total capacity after starting from May due to the safety measures taken to comply with the social distancing norms, disruption in the supply chain network and lack of demand in the market.