The COVID-19 pandemic is causing disruption in economies across the world. Several countries have gone into a complete lockdown as governments try to control the spread of the virus. The outbreak has also impacted the global auto sector significantly
Companies like Maruti Suzuki, Tata Motors, Mahindra, Bajaj Auto and Hyundai have decided to halt production in India. Maruti Suzuki halted its operations at its Haryana unit to comply with the government-imposed shutdown. Its R&D centre will be shut at Rohtak. There is no clarity yet when operations would recommence.
Maruti had targeted annual production of 2.2mn by 2020 after operations at its Gujarat plant commenced. Currently, the company has three manufacturing facilities with a combined capacity of 1,700,000 units.
Last week most global auto companies idled production in Europe, Canada and the US as COVID-19 cases continue to rise.
Mahindra & Mahindra has decided to suspend operations at its Nagpur, Pune and Mumbai facility from Monday night onwards. Hero Motocorp has halted all operations in India, Colombia and Bangladesh till March 31. Tata Motor is rapidly curbing activities at its car factory in Maharashtra and preparing to shut down if COVID-19 related restrictions increase further.
The European Automobile Manufacturer’s Association (ACEA) have announced temporary closures of plants. The existing pressure of low demand, supply shortages and government measures have all added to a slowdown in the auto sector. ACEA, however, cited that it is important to keep the production and supply of spare parts going especially for vehicles used to deal with emergencies like ambulances, firefighters, law enforcement, relief organisations and other public (medical) services.
Tyre manufacturer, Goodyear, in response to a sudden fall in demand due to the spread of COVID-19, has suspended America’s manufacturing till further notice. A phased shut down will begin across the company’s tyre, rethreading and chemical plants in Brazil, Mexico, Colombia, US and Canada in the near term. Its Peru facility has been shut since last week. The company will closely monitor local conditions surrounding its warehouse, keep a check on the inventory and supply levels to continue the delivery of their products.
The COVID-19 situation has disrupted the normal course of the economy. The auto sector is a huge consumer of metals including steel, lead, zinc, aluminium. These production halts will also affect metal demand.