Covid-19 Impact: After the outbreak of one of the most life-threatening viruses that originated in China, it has created a lot of havoc across the globe and in Automobile Industry, resulting in a huge impact on almost every aspect of society, which includes the Indian automotive industry. In recent times, car and bike makers and their suppliers have been striving to ensure vehicle assembly stays afloat, but in March, the industry has taken joint action in line with the advisories of the government.
Production of automobiles and components have been shut in manufacturing facilities making up the effects of demand slowdown from last year. The massive slump in demand has made it very challenging for Indian automakers to come up with a recovery plan once the lockdown around the country comes to an end.
This entire virus crisis has cost the Indian Auto industry an estimated revenue of ₹15,000 crore. The average earnings of the Indian auto sector is about ₹2,000 crores every day, and by stopping production in the assembly line, it could lead to a massive loss. The current yearly business of the industry is pegged at ₹7.8 lakh crore. There is also a contribution of 7.5% to India’s overall GDP, which accounts for 49% of the manufacturing sector.
As it stands, there was a slowdown in the Indian auto industry in 2019, and now, the pandemic has caused further trouble. This has also resulted in under-utilisation of production capacity for a lot of auto producers in our country. Because of the virus outbreak, there has been immense pressure on automakers to bring production to a halt, further making the official employees to work from home. In order to restore production, car and bike makers will have to bank on the launches of new models and upgraded BS6 models too.
Ever dealerships have been hit in districts that are experiencing lockdowns. There are thousands of dealers who’ve had to shut down in many cities, even in areas where there no necessity for a lockdown just to break the corona chain. A major chunk of the BS4 inventory remains stocked up in dealerships because of the impact of the virus.
In the Indian auto sector, many employees have lost their jobs due to the pandemic, again resulting in a massive slowdown. Contractual workers who constitute over 55% of the workforce, have been put to inconvenience as well. Migrant workers have had to walk miles to reach their hometowns. Workers have been waiting to return to their jobs, and this has had an impact on labour cost as well.
In order to respond appropriately to the economy after the pandemic, the Indian auto industry news will first have to recover from the revenue losses experienced due to this whole pandemic. Before everything gets back to normal, the massive slump in demand is expected to last for a bit. What’s very imperative for manufacturers is to regain demand once the economy recovers. A shift to BS6 compliance saw many customers put a halt on their purchases, but the end of the lockdown could bring these customers back. The industry is currently on an uphill, but with everything in place, it should be able to recover from the aftereffects of the lockdown.