Indian Auto sector takes a step towards revival by resuming manufacture of Commercial Vehicles

Auto sector coronavirus

The Coronavirus pandemic has caused a havoc across several industries, and the vehicle manufacturers are no exception. The Indian automobile industry which was already under a slump during the April-February 2019-20 period, amid the onset of the virus in China- one of the major auto part manufacturing hub, faced a major supply chain disruption. However, with the centre granting permissions, things are set to change for the better for the Indian Automobile sector.

The Indian automobile industry which was already reeling under the crisis during the April-February 2019-20 period, amid the onset of the virus in China, faced a major supply chain disruption. As the scenario aggravated, all the automakers were forced to shut their operations in order to fall in with the lockdown directives received from the government.

Society of Indian Automobile Manufacturers (SIAM) amid the announcement of the lockdown, estimated that the plant closures of auto original equipment manufacturers (OEMs) and components makers would lead to a loss of more than Rs 2,300 crore in turnover for each day of closure.

The commercial vehicles segment which was already trying hard to cope with the reduced cargo movement amid slowdown and new rules passed under the axle load norms in 2018 turned out to be more vulnerable in the outbreak of the pandemic.

As per reports, the Commercial Vehicle (CV) segment, a major indicator of economic activities, has crashed 89% year-on-year in March as India comes to a screeching halt to deal with COVID-19 crisis. The segment took a deeper cut when compared to the passenger vehicles, which were down 52% in March.

According to the Federation of Automobile Dealers Association, India (Fada), about 12,000 BS-IV compliant commercial vehicles that were left unsold due to the pan-India lockdown. The Supreme Court, in its order on March 27, has allowed the industry to sell only 10% of the total unsold BS-IV stock within 10 days once the 21-day lockdown is lifted.

Furthermore, as a whole the automobile industry for the first time reported zero/no sales in the month of April registering a year-on-year degrowth of 100%.

In light of the above the Federation of Automobile Dealers Associations (FADA) along with ACMA and SIAM on 2nd May jointly wrote to the Ministry of Home Affairs (MHA), Government of India (GOI) to include auto industry as essential services.

Slow Revival of the Auto Industry:

After the month and a half standstill, the auto sector-after receiving the necessary permissions from the state and the centre, is slowly and gradually commencing operations and moving towards bringing back normalcy while keeping in line with the SOPs and guidelines laid out by both the central and the state government.

Companies such as Bajaj Auto, Mahindra & Mahindra, Maruti Suzuki, TVS, Tata are among some of the manufacturers that have started their operations at some locations with limited staff and full precautionary measures.

VE commercial Vehicles also announced the resumption of manufacturing operations in seven of its plants in the country located in Pithampur, Dewas, and Baggad in Madhya Pradesh and Thane in Maharashtra. The operations have been initiated at 25-40% levels.  

The company informed that the priority lies in being of service to the customers, with the dispatch of parts to various service centres, dispatch of already produced BSVI vehicles, and meeting the needs of transporters engaged in delivery of essential goods.

It also added that the VE Power Train plant has also resumed manufacturing and exports of engines for Volvo Group requirements. Eicher Engineering Components (EEC) plants at Dewas have resumed lean operations to meet requirements of exports customers engaged in agricultural tractors, harvesters, essential mining and construction segment.

“We’re pleased that we have been granted permissions to resume operations at five of our facilities. While we take all the necessary steps to ensure safety of our workforce, we hope that the resumption kickstarts the journey of revival. We continue to work with lean teams to address critical dependencies while we wait for the manufacturing operations to resume in full swing. Till the entire supplier and dealers’ network is mobilized, our key focus will remain on dispatching parts and ready vehicles, and ensuring our plants are ready for the when the lockdown is lifted entirely. “

Mr. Vinod Aggarwal, MD & CEO, VECV on the commencement of the operations

The auto sector is making efforts to restore normalcy and is operating with new safety norms at their workplace including social distancing, sanitization of premises and vehicles before servicing, thermal screening & other checks to ensure safety of workforce as well as customers and drivers visiting our workshops.

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