Industry body Society of Indian Automobile Manufacturers (SIAM) has warned that disruption in raw material supply due to coronavirus outbreak could critically affect production across all segments. The slump in supply chains could also hinder production of electric vehicles in India, which is largely dependent on parts imported from China, and even the BS-VI rollout.
"Many automakers in India import about 10 per cent of their raw materials from China. The disruption in availability of these parts are likely to critically hamper production across all segments, namely passenger vehicles (PV), commercial vehicles (CV), three-wheelers (3W), two-wheelers (2W) and gravely affecting electric vehicles (EVs)," said SIAM President Rajan Wadhera.
"With anticipation of the Chinese New Year, Indian Auto Industry had maintained inventory in beginning of the year, but with the current lockdown in China, supply for BSVI vehicles is likely to get impacted," he further added.
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Manufacturing activities are yet to return to their pace in China as factories are operating at limited capacity due to the coronavirus contagion. In the past three months, the virus has infected almost 81,000 patients in China alone, and more than 1.13 lakh worldwide. More than 4,000 have lost their lives to the contagion.
Auto manufacturers are exploring alternatives to meet their supply chain demands, but it would take a lot of time to reach stable production scale as these components would need regulatory testing.
"SIAM has been in touch with the Government of India with specific recommendations on behalf of the Auto Industry and in this regard, Industry is particularly thankful to the Government for issuing a notification of Force Majeure for Corona virus and also 24x7 clearance of shipments at all customs formations," Wadhera said.
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According to a recent report released by the Fitch Solutions, vehicle production in India is likely to contract by 8.3 per cent in 2020 following an estimated 13.2 per cent decline in 2019. Supply constraints due to the spread of the virus have been cited as one of the reasons for the contraction by the agency.
Another report by CRISIL had said while the domestic industry has inventories for up to 30-60 days, which could help tide over the crisis for the short-term, any shortage of critical components such as printed circuit boards could impair the ability of manufacturers to produce vehicles.