April of 2020 was an unprecedented month for the Indian auto industry with sales dipping to nil and factories and showrooms shutting down due to the nation-wide lockdown imposed to check the spread of Covid-19. In the subsequent months, as lockdown restrictions began to be eased, sales picked up and even reached record highs for a few select car manufacturers. But just when it seemed as if April this year would silence demons from exactly a year ago, the second wave of the pandemic has reared its threatening head. Although a nationwide lockdown is unlikely, localized restrictions could well dampen spirits.
(Also read – Passenger vehicle sales grew by 28% in March, but Covid concerns remain: FADA)
Maharashtra, a major manufacturing hub for several automakers, is reporting the maximum number of positive cases. From night curfews to weekend lockdown, restrictions are being put into place in several parts of the state. While Mumbai is severely hit, Delhi is hardly better and a night curfew remains in place here. OEMs like Mercedes, Tata Motors, Skoda Auto India are among those who have manufacturing facilities in the state.
Down south, Karnataka is also home to several auto makers. The state is bracing for the worst although CM BS Yediyurappa has ruled out lockdown, for now. Toyota is one of the most prominent car manufactures here and was severely hit by restrictions imposed last year.
Lockdown-like restrictions are also in place in Tamil Nadu where car manufacturers like Hyundai and Renault / Nissan have production facilities.
The question then is two-fold – what impact would restrictions, in varying degrees, have on production processes? And what happens to the demand side of it all as people once again pack up inside their homes?
CARE Ratings last week pointed out that the restrictions in Maharashtra, for instance, will have a detrimental impact with trade, hotels and transport sector bearing the brunt of it. “With FY22 starting on a sombre note with the lockdown fully in place for Maharashtra and to a lesser extent in other states, overall production and consumption would be affected,” the agency stated, as per PTI.
And since the auto industry isn’t just about passenger vehicles, the impact could well be felt in segments such as commercial vehicles and two-wheelers as well.
A parliamentary panel report submitted to Rajya Sabha Chairman M Venkaiah Naidu ‘in December of last year had informed that Covid-19 and subsequent lockdowns had meant the Indian automotive industry suffered ₹2,300 loss crore per day and around 3.45 lakh jobs were lost. A second wave of the pandemic then, is likely to rattle more than just the nuts and bolts of the indust