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COVID-19 impact on auto ancillary companies: Industry experts weigh in

Updated : May 05, 2021 01:31:52 IST

Auto sales have slowed down as states impose fresh restrictions amid the rising COVID-19 cases in the country. Dealers have also said that inventories are at an all-time high. To understand the impact on the auto ancillary companies, CNBC-TV18 spoke to NK Minda, CMD of Minda Industries and Ranbir Singh, President and CEO of GNA Axles.

NK Minda said that the North region is operating at 30-35 percent capacity utilisation, while the West and South regions are operating at 60-65 percent capacity utilisation.

He also said that they are calling labour based on demand from different OEMs.

“Many OEMs have declared maintenance off and some of them are still working. So, we are calling our labour according to the demand of the different OEMs and in different regions and trying to manage the supply chain so there are no disruptions for the OEMs who are running the plant,” he said.

Minda further added that the OEMs have not stopped payment despite lower production.

Ranbir Singh said that they are running at full capacity in April as they are not dependent on domestic demand. “As far as our operations are concerned, we are running 100 percent production because our company is not depending upon the domestic demand only. We are depending about 55-60 percent on the export market,” he said.

However, he expects domestic demand to decline by 20-25 percent in May-June and said that the decline in domestic demand will be compensated by strong exports.

Singh said that the company has good visibility from North America Class 8 trucks over the next quarters. He also said that the domestic truck orders are down 40 percent month-on-month (MoM) but expect the decline to be temporary and is hopeful of recovery in Q2.

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