Lockdown-hit India Auto Inc reports zero sales and meagre exports

by Mayank Dhingra 01 May 2020

The ongoing induced lockdown to contain the spread of Covid-19 has put a halt to all production, logistics and retail operations across OEMs. India Auto Inc has experienced a historical month in terms of sales and orders with no carmaker whatsoever being able to register vehicle sales on the ground.

The lockdown has put a stop to all economic activity, barring essential services. With all OEM factories across the country shuttered since March 25, PV makers have reported zero sales in April, registering a year-on-year de-growth of 100 percent.

Starting with Maruti Suzuki, Hyundai Motor India, and Toyota Kirloskar Motor to Mahindra & Mahindra and MG Motor India, all companies have reported absolute zero despatches to their dealers, given the deserted look of their respective assembly lines and showrooms.

According to Naveen Soni, senior vice president, Sales & Services, Toyota Kirloskar Motor, “The Covid-19 crisis exacerbated the already prevalent pressures on the automobile industry but the challenges this time are multi-dimensional. The lockdown was absolutely necessary and a timely step taken by the government to ensure the safety and well-being of people, however the unavoidable side effect of this medicine has been the severe adverse impact on the economic activity."

"As with many other sectors, with the closure of dealerships and manufacturing the operation of the automotive value chain has come to a grinding halt. Restart of the entire value chain cycle and its restoration will be gradual as the industry is faced with the challenges of low consumer sentiments, rebuilding of disrupted supply chains that need factors of productions to be restored including return of workforce," he added.

Potential green shoots
While the company has registered zero despatches to its dealers from its 310,000-unit manufacturing capacity plant in Bidadi, Karnataka, Toyota Kirloskar Motor says there are some green shoots in sight.

Soni explained that, "These are critical times and we were aware that there would be no wholesales in the month of April 2020. As we prepare for a restart, we are working closely with our dealer partners to offer them the best support to re-stimulate demand in a safe and healthy atmosphere. When it comes to safety measures across the company, our supply chain and even at our dealerships, we have devised key guidelines in the form of a ‘Restart Manuals’ which can be adhered to whilst starting operations in both our factories as well as dealerships."

"We are also happy to bring to your notice that there has been some movement in the market as dealers are receiving some enquiries and we will ensure that these customers are catered to as soon as we begin operations. To assist our customers who are homebound, we have made provisions to entirely digitise the sales process wherein we have a 360-degree product view for the customer to take a virtual tour of the vehicle, select financing options and even receive a quotation online.

"We have also made provisions for delivering the vehicle to the customer’s doorstep upon the completion of purchase. These provisions were envisaged to ensure that our customers are not inconvenienced at any point during the virtual purchase process. As a responsible corporate, our endeavour is to follow central and state government directives and work in concurrence with national guidelines on Covid-19," he concluded.

Exports saving grace
Even though domestic wholesales and retail remain non-existent, OEMs could carry out some export activity leveraging regulation with respect to port operations. Maruti Suzuki was able to ship 632 units from the Mundra port in Gujarat, Hyundai Motor India sent out 1,341 cars from the Chennai port.

As the industry is anticipating resumption of operations as the ongoing lockdown is expected to move towards a graded relaxation in the coming weeks, OEMs including their suppliers, are gearing up to slowly restart operations and aim for a gradual ramp up.

Most carmakers have issued new guidelines regarding adherence to appropriate safety precautions such as compulsory wearing of face mask and maintaining adequate social distancing as per the WHO programme to their ancillary and dealer partners. For instance, MG Motor India, which started off with low-key operations at its plant in Halol, Gujarat earlier this week, is now working closely with its supply chain, hoping to be able to ramp up in May.

The biggest challenge, however, ahead of the industry, is to ensure that the supply chain gets back to shape as quickly as possible because even a single missing bolt in the inventory can bring the assembly line to a forced stop.