Auto sales decline in February: Coronavirus outbreak in China hits component supply; challenge to continue for few weeks

Automakers Mahindra and Mahindra Ltd and Tata Motors said their supply of parts from China had been hit, as fallout from the coronavirus outbreak mounts.

Press Trust of India March 02, 2020 07:07:37 IST
Auto sales decline in February: Coronavirus outbreak in China hits component supply; challenge to continue for few weeks
  • Tata Motors reported a decline of 34 percent in domestic sales at 38,002 units in February. The company had sold 57,221 units in the same month last year

  • Mahindra and Mahindra said the coronavirus outbreak has impacted its BS VI ramp-up

  • MG Motor India, too, reported lower retail sales of 1,376 units in February, hit by component supply constraints from China and other locations

Tata Motors, Mahindra and Mahindra (M&M) and MG Motor India on Sunday said they are facing challenges in terms of component supply from coronavirus hit-China. M&M has reported a 42 percent decline in total sales at 32,476 units in February.

"...because of the unforeseeable challenges on the parts-supply from China, our BS VI ramp-up has been affected," Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, M&M Ltd said in a statement. This has resulted in high de-growth in billing volume for February and dealer inventory is now under 10 days, he said.

"Going into March, we anticipate the challenge on parts-supply to continue for another few weeks, before we get back to normalcy," he added.

Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors Ltd said the outbreak of COVID-199 in China and a recent fire incident at one of its strategic vendors affected the vehicle production and wholesale volumes.

MG Motor India too reported lower retail sales of 1,376 units in February, hit by component supply constraints from China and other locations.

"The MG ZS EV has received a stupendous response in its debut month, with over 150 units delivered to our customers already," MG Motor India Director - Sales Rakesh Sidana said in a statement.

The unforeseen coronavirus outbreak has severely affected the company's European and Chinese supply chains, disrupting its production and impacting sales in February, he added.

The disruption in sales will continue through March, Sidana said. "We are working towards stabilizing the situation and are hopeful that reasonable normalcy will be restored by the end of March," he added.

Tata Motors reported a decline of 34 percent in domestic sales at 38,002 units in February. The company had sold 57,221 units in the same month last year.

Auto sales decline in February Coronavirus outbreak in China hits component supply challenge to continue for few weeks

Representational image. Reuters.

Pareek of, Tata Motors Ltd said the outbreak of Covid-19 in China and a recent fire incident at one of the strategic vendors affected the vehicle production and wholesale volumes.

"Multiple actions are being taken to reduce the impact, staying close to our customers by providing transparency of the delivery situation," he said.

Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors Ltd said that commercial vehicle domestic sales in February were 35 percent lower than last year.

The supply disruptions from the COVID-19 outbreak in China could have some impact on the BS-VI transition and all efforts are underway to mitigate it, he added.

Maruti Suzuki, Hyundai see no slide in production

However, major automobile manufacturers Maruti Suzuki, Hyundai, and Toyota Kirloskar Motor do not see any immediate impact on their production schedules due to disruption in the supply of components from plants located in China.

The companies, however, said they continue to monitor the situation closely, especially the operations of their major suppliers, in order to face any adverse situation that may crop up in the future.

The companies, however, continue to monitor the situation closely, especially the operations of their major suppliers, in order to face any adverse situation that crops up in the future.

"We do not foresee any problem as of now. We will keep in touch with our suppliers and will inform if there is any issue", a Maruti Suzuki India spokesperson told PTI when contacted over the issue.

A Hyundai Motor India spokesperson said, "We are closely monitoring the situation. However, at the moment there is no impact on the functioning of the company."

Similarly, Toyota Kirloskar Motor (TKM) said there has been no immediate impact so far on supply of parts and its production from the outbreak of coronavirus in China.

"Our tier-I and tier-II suppliers are not yet effected. However, we are continuously monitoring the operations of tier-III and tier-IV suppliers to grasp any possible slowdown that may come forth due to the slowdown in logistics flow in China, especially Wuhan," TKM Senior Vice President (Sales and Service) Naveen Soni said.

The company focuses on increasing the supply base through localisation of parts and components, thereby providing an opportunity for local suppliers, he added.

TKM remains committed to effectively contribute towards government's 'Make in India' mission, and has developed a global supplier base and supply chain in India in a period of 20 years, Soni said.

"These localisation efforts have also ensured a smooth transition of our manufacturing plant to 100 per cent BS-VI manufacturing facility from January 2020 without any significant supply roadblocks. Simultaneously, our dependency on multi-sourced parts has allowed us flexibility of sourcing from other countries when China has an impact," he added.

Kia Motors India said its production has also remained unaffected so far. "The coronavirus hasn't impacted us till now, but we are keeping an eye on the development for gauging the future impact," a company spokesperson said.

MG Motor India, however, reported disruption in supply chain which impacted its production and sales performance in February.

"The unforeseen coronavirus outbreak has severely affected our European and Chinese supply chains, disrupting our production and impacting our sales in February and will continue through March," MG Motor India Director Sales Rakesh Sidana said.

The company is working towards stabilising the situation and is hopeful that reasonable normalcy will be restored by the end of March, he added.

Tata Motors declined to comment on the issue, but its CEO and Managing Director Guenter Butschek had earlier this month said that clarity about supply constraints of components from China will only emerge when workers in the coronavirus-hit country rejoin work. The company imports certain components for both Nexon EV and other traditional models from China.
Auto industry body Society of Indian Automobile Manufacturers (SIAM) had earlier said that it will collect information and data from its members to understand if there could be disruptions, and to what extent, if any.

Two-wheeler makers Hero MotoCorp and TVS Motor Company had said earlier this month that coronavirus (COVID-19) outbreak in China would hit their production by around 10 per cent in February.

Citing disruptions in automotive supply chains due to coronavirus outbreak, rating agency Moody's has already lowered its global auto sales forecast.

Similarly, the Association of Indian Forging Industry (AIFI) said that disruption in supplies due to the coronavirus outbreak in China has hit domestic forging industry along with automobile and auto component manufacturing sectors.

The domestic automobile industry, which has been riding through the worst slump in two decades, is likely to be negatively impacted and its supply chain disrupted if the coronavirus outbreak in China and South-East Asia persists longer, rating agency Icra had said last week.

Around 3,000 people have lost their lives in China due to the disease so far.

Cases of coronavirus have also emerged in various other countries, including South Korea, Japan, Iran, Italy and Singapore.

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