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Auto/Tech Electric Vehicles National Chronicle Special

Auto sector staring at Rs 15,000 cr losses

New Delhi: As the Indian economy has already started feeling the brunt of the Coronavirus Pandemic, the Indian auto sector will be one of the worst affected sectors. According to ETAuto research, the overall industry losses may be somewhere between Rs 13,000 to Rs 15,000 crore by March 31. As the disease is increasing its footprint in the country and the government regulations are becoming stricter, more and more automakers are forced of shut down their plants. The Indian auto Industry is estimated to be of size 7.8 lakh crore.

Due to the complete shutdown for around 10 days, the industry fears losses amounting to Rs 1,300 crore to Rs 1,500 crore per day. Most auto manufacturers like Hero Motocorp, Mahindra & Mahindra, Tata Motors, Ashok Leyland, Honda cars and Suzuki have closed their manufacturing plants, however, by March 22, few plants like Renault, Kia Motors, TVS auto company etc were still functional. Initially the companies had requested their non-manufacturing employees to work from home. However, as the disease spread, plants had to be totally shut.

The auto industry had already been suffering from severe losses from past 18 months due to weak demand thus underutilization of the manufacturing capacity. OEMs are still functional at some locations where complete lockdown has not been ordered. However, a complete lockdown might be in force soon. Looking at the current situation, it is highly unlikely that lockdown order will be lifted after March 31.

Even if the lockdown is not in force, it seems impossible for the Indian auto sector to resume its operations from April 1. In China it took the industry several months to resume their partial operations. Besides government bailout, the only other way out for the auto industry is the complete utilisation of the capacity post Coronavirus outbreak. This however will largely depend on the demand from the market.

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