Virus scare may hit China carmakers’ India investments
As China struggles to contain the Wuhan-centred coronavirus outbreak, the resulting shutdown of factories and logistics hubs in the country is slowly constricting the business of Chinese auto majors, which have recently entered India.
The consequent pressure on supply chain, in which most Chinese companies depend on the Indian market, is likely to lead to delayed deliveries for some and postpone launches for others. “It’s an unfortunate development. Since we are dependent on China for supply of major components, we will be impacted for a while. So, deliveries for our MG Hector in February will be delayed. We have relayed that to our customers,” Gaurav Gupta, chief commercial officer at MG Motors told Business Standard.
The firm — a unit of SAIC Motor Corp — had launched the mid-sized SUV, Hector, in June. Soon, it overtook most competitors with retail sales of more than 3,000 units per month.
The government of China-owned Haima Automobile, which has planned an India launch of its first electric vehicle by 2021, said it is gauging the impact of the viral outbreak on its strategic plan. “Since we will be importing a completelyknocked-down version of the vehicle, we may expect some disruption due to closure of many supply chain points. However, as of now, there is no change of plan,” said a senior executive of Bird Electric with which the firm has partnered for its India foray.
The auto maker, on Wednesday, showcased two of its globally most successful passenger vehicles – 7X and 8S – at the Auto Expo 2020. It is yet to firm up its investment plan for India.
The outbreak of the deadly disease is also likely to hit plans of Great Wall Motors, which had entailed an investment of $ 1 billion for the Indian market, said Kaushik Ganguly, director strategy and planning of the company.
Great Wall plans to enter the Indian market by bringing premium SUVS under the Haval brand in the next calendar year. The company announced its India entry plans with the acquisition of General Motors’ Talegaon plant last month. It is presently in talks with various suppliers in China and India to firm up a sourcing strategy.
After years of giving free passes to counterparts from Korea, Japan, US in the Indian auto market, Chinese automakers had planned a major push to grab the fifth largest car market in the world. SAIC Motor Corp, Great Wall and FAW have unveiled cars packed with technologies, including artificial intelligence and Internet of Things.
According to the company’s president, Rajeeb Chaba, it has planned an investment of ~5,000 crore in India till 2021.
GWM unveiled the Haval brand of SUVS and vehicle concept 2025 to mark its presence in the Indian market. The company unveiled four SUVS at the event which includes Haval H9, Haval F7X, Haval F7 and Haval F5.
However, it’s not only Chinese firms whose operations have been hit due to outbreak of the disease. Global carmakers with a sourcing network that expands across various continents, too, are worried. “Cornavirus will have an impact on commercial production as everything in China is closed. It’s too early to predict the impact it will have on our global supply chain,” said Matthias Leuhrs, head region, overseas, at Mercedes Benz. Mercedes sold a record 690,000 cars in China last year, a 5 per cent growth year-on-year, he said.
Hyundai has suspended production in South Korea — its biggest manufacturing base. SS Kim, managing director of Hyundai Motor India told Business Standard that his company has been in talks with suppliers in the global sourcing network to take stock of the situation.
Delivery and launches may be delayed as most firms depend on China for sourcing materials