Auto firms may not go full throttle amid uncertainties

Automakers in the country are adopting a wait-andwatch approach prior to ramping up production in the wake of the second Covid-19 wave, parts and raw material shortage and demand uncertainty, said executives at auto firms and component makers.

Earlier this month, several of them, including Maruti Suzuki, Hero Motocorp, Honda Motorcycle and Scooters India (HMSI), Honda Cars India, Toyota Kirloskar Motor,

Tata Motors, and Mahindra and Mahindra had undertaken plant closure amid the raging pandemic. While most of them have resumed production, the capacity will be a third of what most of them manufactured in January and February.

Shashank Srivastava, executive director — sales and marketing — Maruti Suzuki India said the ramp up will be governed by how quickly the restrictions are lifted. Among other things, extension of the lockdown by several states, up to the first week of June, has also added to the uncertainty and will impact retail numbers, he said.

He said, “States under lockdown currently account for 80-85 per cent of sales.” Added to that are the supply side issues. “When we ramp up, many issues will have to be tackled,” said Srivastava. Unlike last time, this time the rural markets are also affected. However, the silver lining is the forecast of a good monsoon, healthy wheat procurement and better Rabi sowing, he pointed out.

I.H.S Markit, a market research firm, has pared its forecast for light vehicle sales in India from 3.65 million earlier to 3.5 million now, said Puneet Gupta, associate director at the firm. “Barring a few, most manufacturers are running single shifts due to employee absenteeism, shortage of parts, and raw materials. We don’t see demand coming back as sharply as it had after the first wave,” said Gupta.

An executive at a component manufacturer aware of production plans of Maruti, Hero Motocorp and HMSI, said Maruti produced a total of 45,000 cars this month and plans to scale it up to 165,000-170,000 in June. Hero, which made 120,000150,000 units this month, plans to increase it to 450,000 units.

HMSI, which made only a few thousand units this month, is looking to scale it up to 320,000-340,000 units next month. Both Tata Motors and Mahindra have clipped next month's schedule by 20-30 per cent from the January and February levels, said an executive at a Punebased auto parts supplier. “May has been a challenging month in India and we expect June to continue this trend,” said Sandeep Khullar, general manager off-highway & commercial vehicles at Dana India. Dana supplies components to commercial vehicles.

Meanwhile, even as the automakers in the northern and western region are limping back to normalcy, their counterparts in Tamil Nadu, are now facing the pandemic’s wrath. Plants in the state are suspending operations and reducing shifts as employees threaten to go on strike due to health concerns about Covid-19, reported on Tuesday.