New Delhi:
The memories of the debilitating two-year long Covid-19 and its widespread impact are still fresh for the automotive industry in India and the whole world. Now, a new wave of the ominous Omicron variant from China is stirring up concerns all over again. But this time, the industry seems better prepared and not as anxious as it was during the first wave in 2020.While the companies feel safeguarded for a few months, they are cautious, defensive and taking precautions for the changing dynamics.
According to Ganesh Mani, Chief Operating Officer, Ashok Leyland, “Fortunately, we have been maintaining our inventories and have sufficient stocks for the next two months. We don’t see any major immediate disruption.”
“We are watching the situation closely. Even if there could be any disruption, it would be a few months away,” he said.
Tarang Jain, CMD, Varroc Group, said, “We need to keep a close watch for the next few months. A disruption is possible due to rising COVID cases.”
“The industry has not yet gone back to the just-in-time inventory scenario, but we definitely need to maintain the just-in-case methodology. Post COVID, the optimum level has gone up a little higher and OEMs are mostly keeping a month of inventory now,” another senior executive of one of the largest OEMs, said on condition of anonymity.
Talking on similar lines, Anurag Garg, MD & Country Head, Vitesco Technologies India, said, “It has just started but the situation is looking concerning. We need to discuss and may have to come up with alternative measures.”
Gaurav Vangaal, Associate Director, S&P Global Mobility, said, “Overall, the scenario looks stable. Most auto OEMs boosted their inventory and as of today, no immediate impact is expected. However, we need to be cautious about the developing situation. It also depends on the timeline of shutdown in the Chinese provinces.”
Carmaker Maruti Suzuki has a block closure – where manufacturing companies stop production for a brief period – scheduled next week. So, any immediate impact of the emerging COVID situation is unlikely on its production as well. As a precautionary measure, some automotive plants are also conducting COVID tests for workers.
Going forward, if the situation worsens, the availability of semiconductors which resulted in year-long booking backlogs this year may be impacted again. The industry is also keeping a watch on container movements as it is cautious about the impact on port operations and their productivity in China.
Earlier in 2020, the automobile industry faced various setbacks owing to the global pandemic. With over 80% of the world’s auto supply chain connected to China, production shortfalls were observed. For the safety of the workers, automotive plants remained closed for months.
Owing to these disruptions in the last two years, most auto companies had been focusing on localisation. While the plans are still on, the time gap of two years is not enough to build it from scratch and in case the situation goes from bad to worse, this may be a hindrance again.
According to the latest reports, at least four cases of the Covid strain driving China’s current surge of cases, have been detected in India so far. The Union government has also asked states to send samples to labs for genome sequencing, which can help identify the variant or sub-variant.
Prime Minister Narendra Modi on Thursday cautioned people against complacency and urged them to wear masks in crowded places. As per a report, he reiterated that “Covid is not over yet” at a high-level meeting and advised states to audit Covid-specific facilities to ensure operational readiness of hospital infrastructure.
The Omicron sub-variant BF.7 has already been active in other countries, including the US, the UK, Japan, Hong Kong, Brazil and South Korea.
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