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Third COVID wave could disrupt supply chains, says Hyundai India

South Korean automobile giant, Hyundai Motor India, is bracing for the third wave of COVID-19 infections.

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By Jude Sannith  July 1, 2021, 10:56:49 PM IST (Updated)

Third COVID wave could disrupt supply chains, says Hyundai India
Two months since Tamil Nadu went into lockdown and businesses had to down shutters, South Korean automobile giant, Hyundai Motor India, is bracing for the third wave of COVID infections. However, the South Korean automobile giant with a plant just outside Chennai says it has ticked most boxes in the quest for preparedness.


“If a third wave comes a whole lot of supply chain disruption could perhaps happen,” said Ganesh Mani, Director (Production) at Hyundai Motor India, “But with vaccination coming up in a big way, hopefully it won’t affect us.”

Only a month ago, when Tamil Nadu was in the midst of a lockdown, Hyundai’s Irungattukottai plant ran into labour trouble, as factory workers and labour unions demanded leave of absence for a week as a health and safety measure.

This demand came, even as automobile plants in the states were permitted to continue operations since they came under continuous industries. Over the next few days, Renault Nissan faced a labour strike that forced it to suspend operations, even as Royal Enfield announced a factory closure for health and safety reasons amid the second wave. Hyundai’s management says it has reason to believe it won’t face similar issues, henceforth.

“The most important thing to follow at a plant is social distancing and COVID protocols,” said Mani, “The kind of measures what we’ve taken won’t affect our production — we’ve inoculated 85 percent of our plant workers. We are prepared for any kind of eventuality.”

Production already at pre-pandemic levels

These measures Mani mentions, include alteration of manufacturing lines within the plant, including a ‘no-touch manufacturing’ protocol that aims to minimize human contact with newly produced cars. The innovations have meant that Hyundai’s production has reached pre-pandemic levels, the company told CNBC-TV18.

“We have seen production touch pre-COVID levels — those that prevailed before March 2020,” said Mani. The bad news, however, is that a global shortage of semiconductors could throw automobile production out of gear, and Hyundai is no exception.

Today, Hyundai has a full-strength plant back in action, even as it announced the rollout of its 10 millionth car, since beginning manufacturing operations 25 years ago. The landmark car was an ash-black Hyundai Alcazar — the company’s latest addition to its SUV range — that was flagged off by Tamil Nadu Chief Minister MK Stalin, who also autographed the car’s bonnet before sending it on its way.

SUVs account for 40 percent sales share

Together, the Hyundai Alcazar, Creta, Venue and Tucson are giving the company’s SUV fleet a major shot in the arm. The numbers agree too. While 35 percent of car sales today are accounted for by SUVs, nearly 40 percent of all Hyundai cars sold belong to the segment.

In a select media interaction, Hyundai Motor India MD, Seon Seob Kim indicated that while nearly 52 percent of present-day customer-demand for Hyundai’s cars is for SUVs, there are no immediate plans to boost production of the segment. The reason: “If we have to match that demand, we will have to end up compromising on manufacturing other models,” said Kim.

However, Mani said that a ramp-up in SUV production was certainly possible if manufacturing capabilities and vendor supplies stayed flexible. These plans find resonance in the Hyundai’s recent ramp-up of the Hyundai Creta’s production numbers when the plant doubled 5,000 models per month, to 10,000.

“We started off 20% (SUV sales share), improved to 30%, and ramped up that number to 40 percent,” said Mani, “The demand for SUVs is so high that our hands full. So, the only thing we can do is to keep our facilities and vendors ready so that when the market is looking up, we can ramp up.”
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