Automotive sector sends executives home to wait out Covid-19

As factories make changes to their operations to minimise the risk of infection, India’s automotive sector is set to experience major disruption in the coming weeks. Executives in the sector are already working from home.

This is according to Animesh Kumar, Director of Automotive Consulting at data analytics and consulting firm GlobalData, who has offered some insight into how the automotive sector is coping with the current situation. In compliance with government regulations across the globe, as many as 25,000 automotive executives are now working from home.

These executives belong to some of the sector’s largest original equipment manufacturers (OEM) according to Kumar, including the likes of Ford, Tata Motors, Mahindra, Volkswagen, Renault, Volvo and MG Motors. Makeshift arrangements in such key firms is likely to cause disruption for the entire sector.

Factories, meanwhile, remain operational, although Kumar anticipates some disruption here as well. “While factory workers will continue to operate in plants, it will not be ‘business as usual’. OEMs are trying their best to give safe working environment to factory workers and other employees in key operational roles in order to ensure that supply chain does not get further impacted,” he said.

Some measures being taken to minimise the spread of infection in factories include the introduction of thermal screening procedures, travel restrictions, mandatory physical distance, as well as the “suspension of biometric attendance systems,” explained Kumar.

The disruption he refers to meanwhile, is the reduction of Chinese components in circulation across the global automotive landscape, previously a crucial part of the supply chain. As the sector contends with the supply shock, Kumar indicates that a demand shock is also on the cards. The sector was already grappling with shifts and changes in consumer demands, and is now faced with the fall out of demand altogether.

“Covid-19 is also impacting the demand side as there has been a decline in footfalls across dealerships. There are reports that in some states, authorities have asked auto dealerships to temporarily close operations. With a sudden spike in the number of confirmed cases in India, footfalls can decrease further,” he stated.

At last count, the government of India reports 16 confirmed cases of Covid-19 deaths in the country. The automotive sector is one of many looking to navigate the current crisis. Other sectors such as the hospitality industry are facing much more direct challenges from the spread of Covid-19, while India’s budding tech sector is also now struggling with a variety of changes.