Pandemic and the automobile industry in India

Introspecting into the havoc caused by the pandemic COVID-19 is precarious and heart-throbbing. Not only this outbreak has created a change in the day to day lifestyle but also it has affected the manufacturing and production industry massively. China is the world’s largest exporter and 2nd largest importer had experienced a deceleration in GDP by 1-1.25 %. And China accounts for approximately 19.71% of global GDP at purchasing power parity and obviously it will affect the global economy. Therefore roughly it is being estimated that the global GDP will suffer by 0.5%.

 Let us understand the impact analysis of the pandemic in automobile sector in India-:

  1. The disruption of supply chain from China-
  • Currently, China accounts for 27 percent of India’s automobile part as well as global auto parts makers such as Robert Bosch GmbH, Valeo AS and ZF Friedrichshafen AG located in the Hubei province. Leading to the delayed production of the BS4 compliant models.
  • Post-lockdown period China’s economy has indicated a V-shaped recovery. Original Equipment Manufacturers (OEMs) expects a domestic PV (profit-volume) sales to recover by this financial year 20-21. Agricultural vehicle sales such as tractors are expected due to the ongoing Rabi crop cultivation in India.
  1. Bad impact on demand-
  • Due to the lockdown and transition in BS6 models, OEMs have to face the sudden recession in the month of March. That led to a halt in production in the latter half of the month.
  • Due to halt in the clearance of the existing BS4 model’s automobile industry. FADA had appealed to the Supreme-court. The unsold inventory is worth over ₹7,000 crores. Supreme Court relaxes the deadline (March 27, 2020).
  • According to the reports of Fitch Solutions, there will be a contraction in vehicle production in India by 8.3% in 2020 following a 13.2% decline in 2019.
  1. The impact on the EV market-
  • India’s auto industry was experiencing a sudden growth in the EVs. But due to pandemic, they are facing problems for the parts being produced in China. Because China was the producer of the batteries.

# References-  

  • News18 Auto youtube channel 
  • Economic times
  • livemint

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