After battling a prolonged slowdown and disruption caused by new emission standards over the past 18 months, the automobile industry is now bracing itself for a ‘wash out’ in March owing to the impact of the coronavirus pandemic.
Expect overall sales to fall by 25-30 per cent year-on-year, warns Rajan Wadhera, president of the Society of Indian Automobile Manufacturers.
The industry had already been expecting March to be a volatile month because the new BS-VI emission norms kick in on April 1. But adding to the doldrums is that Covid-19 has affected the supplies of critical auto parts from China, particularly for BS-VI vehicles.
“Commercial vehicles will be hit the most as procuring parts for them from China will be a challenge,” said Wadhera.
According to Deepak Jain, president of Auto Component Manufacturers’ Association, India’s auto component industry imported parts worth $17 billion in the financial year 2018-19. Of this, China’s share was $4.5 billion.
To be sure, China is ahead of other countries in BS-VI. Most global suppliers have used China to develop those parts as it allowed them to achieve the kind of scale not possible in India or elsewhere, explained Wadhera. All truck makers saw their dispatches drop more than 45 per cent last month as compared to a year ago as they curtailed dispatches to dealers and remained cautious of stock-piling ahead of the new emission norms coming into effect. Automakers in India count dispatches to dealers as sales. Sanjeev Vasdev, managing director at Flash Electronics, which counts several two wheeler makers including Bajaj Auto as its key customers, is also worried. “The impact of the coronavirus will be felt from this month onwards in a major way and will be more critical for some manufacturers, especially the ones that have their BS-VI roll out scheduled,” said Vasdev.