Tata Motors, India's biggest vehicle maker by revenue, is being forced to suspend work at its plant in Thailand where it makes the stylish single and double cab pick-up truck Xenon in partnership with a local company.
Similarly, manufacturers of two of the biggest Japanese brands Honda and Toyota operating in India have also suffered production losses in Thailand, which market watchers claim, will eventually show on their India output figures. The three months long crisis triggered by unusually heavy monsoon rains has left at least 377 people dead and damaged millions of homes and livelihoods, mostly in northern and central Thailand.
As Bangkok remains under constant flood alert, several automotive manufacturers have seen their plants inundated with more than knee-high waters entering the main vehicle assembly area also crippling supplies of essential auto components.
In a statement a Tata Motors spokesperson stated, "We have kept the plant's operation suspended this week as a precautionary measure, as is reasonable. We will review the situation on Monday. We have stocks both of finished vehicles and material."
The Mumbai-based company owns 70 per cent in the venture while the rest is owned by Thonburi Automotive Assembly Plant Company.
The JV makes pick-up trucks in diesel and CNG versions in addition to the recently introduced light truck Ace, which is known as Super Ace City Giant in Thailand. Thailand is the second biggest pick-up market in the world after the US.
While an official from Honda Siel Cars India (HSCI), the subsidiary of the Honda Motor Company, stated that the company is not facing any crunch in auto parts supply presently, it will do a full review of the situation in the coming days even as Thailand's premier declaring on Monday that flood waters 'may not recede for weeks'.
"No (current) status has been received about the floods but for now there is no impact (on operations for the time being", stated the HSCI official.
Ammar Master, Manager, J.D. Power Asia Pacific, Thailand Branch, said, “The impact on the auto industry in Thailand is severe. Honda’s production plant in Ayutthaya province is completely inundated, while suppliers spread across several flooded industrial estates especially in Ayutthaya and Pathum Thani provinces, which account for 15-20 per cent of parts production in Thailand, have also ceased to operate. As a result, nearly all manufacturers including Ford, Isuzu, Mazda, Mitsubishi, Nissan and Toyota have been forced to idle their plants starting October 10 and lasting until the end of the month.”
Although HSCI, which makes the Brio, City, Civic and Accord models in India, is aggressively moving towards more localisation of its products thereby reducing dependence on foreign parts, it still procures some vital components from countries like Thailand.
“With its plant located in the inundated Rojana Industrial Estate in Ayutthaya province, Honda is directly and most severely impacted among all OEMs from the flooding in Thailand. Honda’s plant was overrun with flood waters in the first week of October, and we do not expect production to resume before January 2012”, Master further added.
Toyota Motor Corporation, the world's largest automaker, too has shut operations at its Thailand plant. Operations remained suspended for the fourth week in a row forcing the Japanese giant to cut production in other parts of the world.
In India, a Toyota Kirloskar official feared that the impact of the floods in Thailand will be felt in here also. In addition to critical components, the company also imports completely knocked down kits (CKD) from Thailand which are later assembled in India.
Sandeep Singh, Deputy Managing Director (Marketing) Toyota Kirloskar Motor, said, "We will certainly get impacted, we have kits in pipeline for the production till November 14 and the quantum of impact after November 14 we will be able share on 29th October."
Honda and Toyota, both of which have launched compact cars in India recently, have been battered with twin disasters of earthquake and tsunami in Japan earlier in the year resulting in supply shortage of components and crippling output in India.