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Closed for more than a month due to the COVID-19 pandemic, Indian automakers may not see a single vehicle sale in April. The number of monthly car sales due next week could be a record-keeping exercise for the auto industry, which has never, in history, seen zero sales.
“We are looking for zero sales in April, a phenomenon we have never witnessed in history,” a Toyota official Kirloskar, the maker of the SUV Fortuner, told DH.
A Maruti Suzuki official also echoed the sentiment.
Worse yet, automakers don’t see any immediate help, even if the blockade is lifted on May 3. The highly integrated vehicle manufacturing industry says it needs to resume the end-to-end supply chain before production begins.
India’s auto industry is also heavily reliant on imports, and reengineering supply chains will be difficult. Shifting to domestic component manufacturing will take time.
The Society of Indian Automobile Manufacturers (SIAM) has estimated production losses of around Rs 2.3 crore per day for automakers.
Several automakers DH spoke to said the road to recovery is not in sight. India imports automotive components worth Rs 1.33 lakh crore each year, with more than a quarter coming from China. Germany, Japan and Korea are the other providers.
“Starting from steering and braking systems, engine parts, alloy wheels and lighting systems for passenger vehicles to fuel injection pumps, it all comes from abroad,” said one leading vehicle manufacturer, adding: “We need open shipping channels with China, accounting for 27% of India’s total automotive components
imports “.
Many auto companies such as Maruti Suzuki, Toyota Kirloskar, Honda Cars India and Hyundai Motors, whose production units fall into the green zone had been given permission to start operations last week, but have not yet made the decision to restart production.
Toyota Kirloskar, which imports components for its range of passenger cars from its parent company in Japan, said that even after the blockade is lifted, it would be difficult to start manufacturing any time soon.
“Since air transport is closed on international routes, it would be difficult for us to obtain these components. We have to look for alternatives in the domestic market, ”said Parasuraman, deputy managing director of Toyota Industries Engine India Pvt Ltd.
But the Rs 3.5 lakh crore auto parts industry, which provides employment for 50 lakh people, is holding on to the hope that vehicle manufacturers will place orders once the blockade is lifted.
The Automotive Component Manufacturers Association said the government should put the entire auto industry on the essential products list. They must reduce the goods and services tax (GST) to 10% of the current 28% on automobiles.
The auto and auto parts industry, which contributes more than 7% to India’s GDP and employs around four million people, may emerge in the medium and long term if it is backed by a policy framework, KPMG said.
