Hyundai, Maruti to resume production in May

Maruti Suzuki India Ltd and Hyundai Motor India Ltd plan to resume production from May, said three people directly aware of the development, more than a month after a covid-19-induced lockdown forced the country’s top two automakers to suspend operations.

Maruti and Hyundai would follow MG Motor India Ltd, which recently reopened its factory in Gujarat, said two of the three people aware of the developments.

To be sure, Maruti and Hyundai are likely to start with just 20-30% of their manufacturing capacities depending on government permissions, and slowly scale up as lockdown measures are eased and consumer demand recovers.

A resumption in production by Maruti and Hyundai is critical for India’s automotive industry as they together control nearly 70% of the domestic passenger vehicle market.

Maruti will produce just 45,000 vehicles in May, ramping it up to 65,000 in June if conditions remain conducive, said the first person cited above. This will be less than half of the 150,000 vehicles Maruti tends to normally produce each month on an average.

Hyundai has decided to start with just 12,500-13000 units in May and increase volumes gradually, the second person cited above said. The South Korean company generally produces 60,000 vehicles each month in Chennai.

Most other automakers are unlikely to follow Maruti and Hyundai, and some may decide only in the middle of May or June on when to resume production.

Maruti is likely to opt for its Manesar factory in Haryana to restart production. There will be only one shift instead of the usual three, with focus on affordable hatchbacks, said the first executive cited above. The company has also been enquiring about the preparedness of its vendors and some of them based out of Pune may not be able to supply as the region is in the red zone.

“These are all initial plans and will depend on rules and regulations by local authorities. Some suppliers are based out of Gurugram and it has been declared a hotspot. The government needs to give proper instructions to manufacturers,” the the third person mentioned above said.

Maruti on Monday received permission from the Haryana government to start maintenance at its Gurugram plant.

Email queries sent to Maruti Suzuki and Hyundai on Monday and to MG Motor on Tuesday were unanswered.

The machinery was well-oiled before the covid-19 pandemic, but the prolonged shutdown will add to the challenge of getting the entire supply chain running again, said Puneet Gupta, associate director, IHS Markit.

“There is no demand, but there can be a sudden spurt as things get back to normal after a few months. Today, all states are following their unique approach so demand may not be uniform. There are multiple challenges both from supply and demand side,” said Gupta.