The second wave of Covid-19 is threatening to slam the brakes on the automotive sector that was just beginning to accelerate. The cautious optimism with which the auto-makers looked forward to FY ’22 has given way to worry as the sudden spike in the infections has led to lockdown in many key markets. In recent weeks, there have been a number of automakers that have had to shut down their manufacturing plants due to the rapid increase in COVID-19 cases. Maruti Suzuki, India’s largest passenger car company accounting for over 50% of the domestic car market, announced that it will stop producing cars in the company’s plants in Haryana between 1st-9th May, 2021 to make oxygen available for the healthcare and medical sector. The press release note stated, “As part of the car manufacturing process, Maruti Suzuki uses a small amount of oxygen in its factories while relatively much larger quantities are used by the manufacturers of components. In the current situation, we believe that all available oxygen should be used to save lives.”
The list of manufacturers that have halted production includes-
Asides from list of manufacturers mentioned above, Mahindra & Mahindra Limited and TVS Motor Company have also decided to prepone their scheduled maintenance of four working days in the month of May, in a staggered manner.
Experts believe that the peak of daily infections will come about in mid-May but there is still no concrete data to back this claim. If the spiral continues even after this date, then it is equally likely that some of these factory shutdowns may be extended beyond the dates announced. There are enough stocks with the automakers, which need not be clogged up further by producing more units. The best way, therefore, is to take a break and wait for the situation to ease out. Further, the problem is that this could end up hitting those companies that also export units. When there are not enough trucks and containers to cart out vehicles from the factories to ports, the challenges will only intensify going forward.
Covid second wave threatens to throw auto industry out of gear-
“Overall, things are not that good. Covid States have gone through lockdowns. All dealerships are closed there and obviously it will affect the retail business. Even in other states where markets are open, customer movement has reduced and footfalls have dropped due to fear psychosis. Overall, walk-ins have dropped considerably,” said Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA).
Automobile manufacturers face fresh concerns with the second wave of Covid-19, but there is really no way out except to be patient and weather the storm. For now, it looks as if sales in May, 2021 will also degrow as most markets are going to be closed till mid of the month. We will have to see how the situation unfolds in the coming weeks.
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