CHENNAI: Local start-stop-start lockdowns are playing havoc with the auto industry’s production and sales ramp-up plans.
Companies readying to scale up to pre-Covid levels as they start launching models or upgrades are having to grapple with frequent off-and-on local restrictions, which have thrown a spanner into production plans and hit supply lines, even though the countrywide lockdown ended on May 4.
Take for instance Honda Cars, which is targeting 100% of pre-Covid production by September. Senior VP & director (marketing & sales) Rajesh Goel said that it was not even thinking of a third shift as the market contracts and ramp-up plans are disrupted by local lockdowns.
“In the past one week there have been multiple local lockdowns. So, we have to balance both the pandemic risk as well as supply & demand. Our factories started production on June 15 and we did 25% of pre-Covid production in June, and have hit 60% in July,” he added.
Sometimes, quick changes in administrative decisions also mean employees return to their hometowns and villages and take time to get back to work schedules. “Timely and clear instructions will help industrial units plan their production cycles and logistics, including work force and raw material movement. The fact is that it takes a lot of preparation in reopening large manufacturing units and involves the participation of everyone in the value chain. Complete clarity and adequate time to start or stop operations will go a long way in helping the manufacturing sector plan their business activities in a proper and safe manner,” said Toyota Kirloskar Motor senior vice president (sales & services) Naveen Soni.
While Bihar has announced a total lockdown, Jharkhand is contemplating one. Cities like Pune and Bengaluru too have imposed lockdowns, partial or total. With the situation so fluid, car companies say they cannot really plan even month on month and have to take it week-by-week. For example, Hyundai plans to ramp up to a third shift production, but with the rider that there should not be any more disruptions, said Hyundai Motor India director (sales, marketing & service) Tarun Garg. What makes this uncertainty worse is that the car industry has been battling both a slowdown and Covid-triggered demand disruptions. Which is why companies are still talking about hitting pre-Covid levels, not peak capacity.
Car marketers also say the dealer network too is impacted by local lockdowns as the whole process of getting a dealership to open shop afterwards takes time.
ICRA cuts growth forecast to -9.5%
With the economy not restarting as anticipated in July 2020, rating agency ICRA has sharply revised its forecast for the contraction in the country’s GDP to 9.5% in FY21 from 5%. ICRA has attributed this to the climbing Covid-19 infections, resulting in a spate of lockdowns, arresting the nascent recovery made in May and June.