Indian Automobile Sector: Loss of Around ₹ 15,000 Crore due to Coronavirus Outbreak

  • 26th, Mar 2020 6:13 PM
  • Subodh Kumawat
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Due to the Coronavirus outbreak is impacting almost every part of the world, whether it is supply chain or leaving every human down. There is a complete lockdown in India and it is for people’s safety. Due to the outbreak and lockdown, It is expected that almost every Indian business Sectors Could Bear huge Revenue Loss.

According to various online reports, the Indian automobile industry is likely to suffer an estimated revenue loss of approx ₹ 13,000 crore to ₹ 15,000 crore due to the coronavirus outbreak. In this hard time of the pandemic that is causing trouble to the domestic economy and several businesses in the country, the report says that If automakers are told to shut down all their operations for the next 10 days, then their estimated revenue loss will be so huge.

It is also notable that a majority of manufacturers like Honda, Maruti, Hyundai, Suzuki, TVS & Tata Motors have already shut down all their operations temporarily. There are also a few companies that are yet to announce closure are Kia Motors and BMW India. On the other hand MG Motor India has opted to introduce disinfect & deliver program initiative for the customers wherein the vehicle will be completely sanitized to ensure minimal risk of infections.

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One of the source ETAuto stated in their report that the Indian automobile sector makes a gross revenue of around ₹ 2,000 crores each day thus shutting down the production by the manufacturers for the next 10 days will result in a huge revenue loss per day wherein the annual business of the sector stands at ₹ 7.8 lakh crore. It is noticeable that the industry contributes around 7.5 percent to India's overall GDP, and that accounts for 49 percent of its manufacturing sector.

Meanwhile, reports also stated that the loss can be recovered, once production operations will be resumed and the manufacturers are willing to ramp up the production and improve capacity utilization. However, one thing that needs to be considered that the domestic automobile sector is already going through a down phase as of now with severe underutilization of capacity due to dull demand over the last year. And now, the coronavirus pandemic is farcing the automakers to stop production at their facilities and also force their non-manufacturing employees to work from home.

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The impact of the coronavirus is getting worse day by day and all the businesses and industries have seen the highest impact in the last 24 hours wherein some of the leading automakers have made the announcement of the closure of their production or manufacturing plants due to an outbreak of the coronavirus as preventive measure till March 31. At present time, the OEMs have stopped the production at their selected facilities located in states where the state government has released orders for the complete shutdown. But after observing the measurement of the impact and rise in the cases of coronavirus in the last two-three days, many industry experts think that the automobile sector may be heading towards a 100 percent shutdown.

The Society of Indian Automobile Manufacturing (SIAM) and Automotive Components manufacturers' association of India (ACMA) have already released an advisory to Auto manufacturers to halt their plant operations temporarily. In the same matter Rajan Wadhera who is President of SIAM stated that, "With a view to the deteriorating situation arising out of COVID-19, SIAM and ACMA have both requested their Members in OEMs and Auto Component Industry to consider plant shut down for a limited period to overcome the critical period so that workers are not exposed to the virus. This is in line with SIAM's motto of 'Building the Nation, Responsibly'".