Maruti, Hero restart operations in challenging Covid landscape

India’s leading bike and car manufacturers have resumed operations at a time when the second wave of Covid has caused a fresh round of lockdowns in many states. It now remains to be seen how the demand dynamics pan out with Hero MotoCorp and Maruti Suzuki now beginning to crank up output gradually at their plants. 

At this point in time, the biggest concern for two-wheeler dealers is the inventory pipeline which just cannot afford to choke at this point in time. Many cities have clamped a shutdown which means dealerships are closed and there are no customers visiting showrooms.

With an average inventory of over two months with most dealers, buyer sentiment is at its lowest with the pandemic now hitting rural areas too. “Many families have been impacted and there have been huge spends on healthcare. Last time, there was an immediate pent-up demand but it does not look likely now. Even online enquiries have dropped significantly,” said a Hero dealer on condition of anonymity. 

It is now a near certainty that May will be a complete washout for two-wheeler makers with domestic numbers expected to crash by over 70 percent. Whether this will continue into June remains a concern since states like Tamil Nadu, Karnataka and Kerala continue to see rising infections.

Limited production at Maruti Suzuki 
As for Maruti Suzuki, sources say it has been operating with very limited production on a single-shift operation at its Haryana plants since May 17. The company did not respond to an emailed questionnaire from Autocar Professional. 

Industry observers say the top priority at this point in time would be to cater to export markets which have bounced back from the pandemic even while India continues to struggle in the second wave. Maruti caters to right-hand-drive markets in Africa, the Middle-East, SAARC and Latin America. Its range comprising Alto, Swift, Baleno, Dzire, Ignis and the Super Carry cargo pickup are shipped to South Africa, Chile, Colombia, Egypt and Ethiopia.

The company has a capacity of 700,000 units over two production shifts in Gurugram and 880,000 units (again across two shifts) in Manesar. Daily output at present is believed to be in the range of 250-300 cars at both facilities which is perhaps the same in Gujarat too. 

While Delhi, Mumbai, Bangalore and Chennai are seeing strict lockdowns with showrooms shut down, auto dealerships at Gurgaon and Faridabad are open to the public. A Maruti dealer in the National Capital Region said demand is still quite weak with cancellations happening as well.

“It is a mixed response. People who are buying are doing so out of necessity or an emergency,” he added. Most car dealers are reportedly holding average inventories of 150-170 cars in their stockyards down from the regular levels of around 250 vehicles. Everyone will be hoping that the second quarter sees a revival in buying sentiment though this will depend on how quickly the infection curve begins dipping.