Vehicle production may be critically hampered by coronavirus outbreak: SIAM

The coronavirus outbreak has seen manufacturers like Mahindra cut its vehicle production targets for the second consecutive month.
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Vehicle production across all categories is likely to be critically hampered due to the coronavirus outbreak in China as many automakers in India import about 10 percent of their raw materials from the neighbouring nation, auto industry body SIAM said on Wednesday.

The Indian auto industry had already maintained an inventory at the beginning of the year in anticipation of the Chinese New Year holiday but with the current lockdown, supply for BS-VI vehicles is likely to get impacted, SIAM President Rajan Wadhera said in a statement.



The auto industry body said the disruption in the availability of these parts is likely to critically hamper production across all segments, namely passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and gravely affecting electric vehicles.

"Manufacturers are exploring alternatives to fulfil their supply chain demands but that would also take a substantial amount of time to reach stable production scale as these components would need regulatory testing," he added.

The Society of Indian Automobile Manufacturers (SIAM) has been in touch with the government with specific recommendations on behalf of the auto industry, he added.

The global auto industry is being severely impacted due to the coronavirus outbreak. As per Moody's estimates, the industry to shrink by 2.5 percent in 2020. However, it is expected to recover in 2021 with a projected growth rate of 1.5 percent.

Earlier this month, a parliamentary panel suggested lower GST rate for the automobile segment at least till the revival of the sector, and uniform road tax across all states against the backdrop of negative growth in the automobile production since July 2018.

The industry is also looking forward to a scrappage policy which has been in talks since 2015. Nitin Gadkari, Minister for Road Transport & Highways of India has confirmed that the scrappage policy is awaiting final approvals and will be passed soon.

(Disclaimer: Additional background information has been added to this PTI copy for context)

(Edited by Saheli Sen Gupta)

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