Production delay set to hit auto sector’s festive sales

MUMBAI: Festive-season sales of the Indian auto industry, where some segments saw volumes in FY20 slide to the lowest in a decade, could be hit rather hard if plants don’t resume full production by June.

Industry experts told
ET that auto makers are currently budgeting for a phased end to the lockdown while planning output schedules. What’s worrying them are obvious gaps in the supply chain.

“Shutting down factories within a day is easy, but to restart a full ecosystem is a Herculean and time consuming task,” said a top industry executive, who didn’t want to be named. “After an average festive season last year and April a total washout, a good festive season looks highly improbable.”

To be sure, the festive-season calendar this year is more back-loaded. Diwali, which is the bumper season for all classes of consumer goods purchases, is in mid-November. “Some of our customers are postponing purchases by up to six months, which may augur reasonably well for the festive season,” said Vijay Nakra, CEO of Mahindra’s automotive business.

There is enough inventory for May, and dealers will also retail the BS-IV inventory when the lockdown ends. They have a 10-day breather for liquidating this stock.

“The industry was already grappling with weak consumer sentiment and a sales slump,” said Naveen Soni, Senior Vice President, Sales & Service, Toyota Kirloskar. “For production to start, the whole supply chain has to start operating, which is in a state of lockdown currently.”

Maruti Suzuki did not want to comment on the festive season, but said that the priority was to get factories up and running, with the entire ecosystem in place. Hyundai’s director of sales and marketing, Tarun Garg, said that the company is preparing for production to begin, and customers will look for personal mobility solutions.