Even as the automotive hubs of Delhi-NCR and Maharashtra gear up  to resume manufacturing  activities  amidst relaxation in the countrywide lockdown, any further delays are likely to hurt the supply of components and vehicle manufacturers operating in passenger vehicles (PV)  and 2-Wheelers (2W) segments the most. 

As per an analysis done by ratings agency CRISIL, passenger vehicles (PV)s, two-wheelers (2W)s and tractors have high dependence on the Delhi-NCR and Maharashtra clusters as major original equipment manufacturers (OEMs) are located here, and they generally source about half of their requirement from their own cluster to optimise logistics. In contrast, production capacities in commercial vehicles (CVs) are more diversified, with players having a base across the four clusters mentioned above, and Tamil Nadu.

This brings out the pivotal role of the Delhi-NCR and Maharashtra clusters from a supply chain perspective. In the Delhi-NCR region, the automotive hub is centered around  Gurgaon, Manesar, Faridabad and Greater Noida while in Maharashtra it is spread  across the Chakan, Talegaon and Ranjangaon areas of Pune. These once-rural areas transformed into automotive clusters a few decades ago due to a combination of factors such as proximity to required infrastructure, well networked connectivity to the market, availability of uninterrupted power supply , skilled labour force and tax incentives amongst others. 

Delhi-NCR is home to manufacturers such as Maruti Suzuki India, Honda Motorcycle & Scooter India; India Yamaha Motors, Honda Cars India, Hero MotoCorp, Suzuki Motorcycles India and International Tractors Ltd. Maharashtra, with its Pimpri-Chinchwad and Chakan belt, houses major OEMs such as Bajaj Auto, and PV players like Tata Motors and Mahindra & Mahindra. Both these clusters source over 60% from within the cluster. As a result, major auto component capacities are located around these two clusters. Notably, OEM plants in the Delhi-NCR cluster and Pantnagar also source from Maharashtra.

What components at risk, and from where?
As per the CRISIL report, the two-wheeler and PV OEMs source cast parts such as cylinder heads, cylinder blocks, crankcase, piston rings, engine valves  are primarily sourced  from Pune-Maharashtra and NCR. On the other hand, electrical and electronic parts for PVs are mainly sourced from Pune-Maharashtra. However, tractors have a high dependence on Tamil Nadu for brakes and suspension. For CVs, transmission appears to be the component at risk, as diversification of facilities is limited and major facilities are based in Tamil Nadu.

Now, with OEMs looking to restart their  operations in a staggered manner, all eyes are on these auto clusters which boast of hundreds of component suppliers across the Tiers. Weakness or failure of even one supplier may end up impacting the entire  supply chain of an OEM.