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Coronavirus might upset transition to BSVI vehicles and hit sales, say automobile makers

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Coronavirus might upset transition to BSVI vehicles and hit sales, say automobile makers

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SIAM says significant disruption in autombile supply chains from European, Chinese and Asian suppliers and passenger car sales getting impacted in February due to coronavirus.

India’s automobile sector, reeling under the grip of a crushing slowdown, could face another disruption in February due to the outbreak of the Coronavirus, a new viral illness that has killed more than 200 in China, spread to more than a dozen countries and declared a global emergency.
China is a vital supplier of automobile parts to India and several cities in that country is under manufacturing lockdown, hobbling supplies.
Rajan Wadhera, president of the Society for Indian Automobile Manufacturers (SIAM) said automakers in India will continue making BSIV vehicles in February, but if certain components do not come from China then these companies would be saddled with mismatched inventory and will not be able to produce vehicles. “That would upset the entire transition from BSIV to BSVI,” he told CNBC-Tv18 in an exclusive interview, adding that most manufacturers have declared cutoff limits for end of life BSIV vehicles.
The Coronavirus has infected over 7,700 other people in China. At least three Chinese provinces have barred businesses and industry from resuming work before February 10.
Authorities in Hubei province, where the majority of the cases have come to light, have barred businesses from resuming work before February 14.
MG Motor, a subsidiary of the Chinese state-owned SAIC, is the first carmaker in India to admit a disruption in supply chains due to the Coronavirus outbreak. An MG Motor spokesperson told CNBC-TV18 that the company’s supplies and production will be severely impacted in February. “We expect significant disruption in supply chains from European, Chinese and Asian suppliers. Our sales may get impacted in February due to the coronavirus, as our inventory levels have been minimum because of the bookings backlog," he said.
The company’s Hector SUV has been a big success with Indian customers, clocking 15,930 units in sales in 2019. The company has received 16,000 bookings for the Hector and 3,000 for the newly launched ZS EV for the coming months.
SIAM officials confirmed that they are assessing the overall impact of the Coronavirus on manufacturing as well as the approaching Auto Expo. Industry insiders said if the lockdown in China continues beyond February 9, there could be a negative impact.
Manufacturers could incur losses if they are unable to manufacture the BSIV quota for February. Most automobile manufacturers are looking to shift their entire production lines to BSVI by end of February. BSIV vehicles cannot be sold beyond March 31, 2020.
India’s component manufacturers are also analysing the possible impact of coronavirus on orders for the coming months. According to Automotive Components Manufacturers Association, India’s component industry posted a turnover of 57 billion dollars in FY19. Industry sources say, India imported 4 billion dollar worth of Chinese components in FY19, which largely went into the after-market.
“If the value chains of the automobile industry are impacted due to lack of certain Chinese components, then component manufacturers would be impacted as well,” said an ACMA official. While a large number of components used in automobile manufacturing are produced in India, most vehicle makers do import certain Chinese components from Chinese and Asian markets due to price benefits.
Naveen Munjal, managing director of Hero Electric, does not foresee an immediate impact on manufacture of electric vehicles. "Considering the fact that the Indian EV market is not evolved enough to sustain an end to end manufacturing of all components, manufacturers are compelled to import certain parts from China and other markets. Coronavirus has spread beyond China and has also affected Taiwan, Korea and other southeast Asian countries resulting in disruption of export at major ports. Therefore, if the situation gets worse, it will have a significant impact on the EV manufacturing process in India resulting in a sluggish inventory", he said.
Munjal, who is also the President of Society of Electric Vehicle Manufacturers said companies that import finished products from China could suffer a major setback.
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