New Delhi: India stepped into Lockdown 2.0 on Monday, opening up sectors of the economy beyond the four walls of home, but automakers are yet to overcome the inertia of forced rest, awaiting the nod of local authorities. Plus, they have the challenge to crank up a frozen supply chain. So, when is the earliest the carmakers can re-start?
Passenger carmakers are unlikely to re-open before May 3, while tractor plants are looking to begin limited operations.
“Our manufacturing operations are linked with supply chains spread across the country,” said Hemant Sikka, President of Mahindra’s Farm Equipment sector. “Although several suppliers are also located in green zones, any critical supplier that happens to be in the red zone can stop the line. We want to ensure supply chain readiness before we decide to start our plants.” The harvesting season has begun, and tractor demand should stay firm.
Pawan Goenka, MD of Mahindra & Mahindra, the country’s largest tractor maker, has recently said that his priority would be to open up tractor dealerships and financing. “The main task would be to clear the existing inventory in the pipeline. It is critical that during this harvesting time, farmers get seeds and crop care,” Goenka had said.
Sources told ET that M&M’s auto plants may not start production this week especially in areas such as Nashik and Kandivali in Mumbai. However, its Zaheerabad plant in Telangana and Rudrapur in Uttarakhand and Nagpur may get requisite permissions to start operations.
Maruti Suzuki said there is no clarity on resumption of production as it would first want the full ecosystem in place, said RC Bhargava, Chairman of Maruti Suzuki. Companies such as Hyundai, TAFE & TVS, which have manufacturing operations in Tamil Nadu, are seeking clarity from the state governments this week.
Tractor majors Escorts and Sonalika are awaiting clarity from the respective state governments. TVS said it is in touch with the Karnataka and Tamil Nadu governments on this issue. The company expects a surge in demand leading up to a revival by September, with a good festival season.
Covid-19 has not affected the tractor industry, and industry experts said localization content of 95% ensures minimal dependence on China. The Tractor Manufacturers’ Association (TMA) has reached out to the ministry of agriculture to help farmers restart agricultural activity so that they don’t miss the current harvest season.
“The supply of parts, vendors, inventory movement and the availability of trucks – all these are issues to be resolved when the plants start,” said TR Kesavan, President of TMA and also the group president of Chennai-based tractor manufacturer TAFE.