Indian auto makers may start getting Chinese supplies soon, Auto News, ET Auto

The resumption of auto-component supplies has also come at a time the Indian industry is

The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1.
The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1.

Mumbai: China’s factories are beginning to come back to life after an extended lockdown in the country’s industrial hubs, and that is good news for several Indian carmakers that have their supply chains located beyond the Great Wall.

The resumption of auto-component supplies has also come at a time the Indian industry is seeking to transition into stricter emission norms, leapfrogging from stage IV to VI in the next fiscal year starting April 1.

“As of now, there is no panic. Our production is not getting affected now because of China and the coronavirus outbreak,” said RC Bhargava, chairman, Maruti Suzuki.

In fact, the situation is improving incrementally.

“Each week is better than the previous week. Almost all suppliers in China have started production, though at lower capacity utilisation,” said Hemant Sikka, chief purchase officer of Mahindra. “If the improvement continues at this pace, by early April, supplies from China will be almost normal.”

Bhargava said that factories outside of Wuhan, a region that has seen the maximum number of deaths from Covid-19, have started working, albeit at lower capacity.

Experts say the supply disruption has also forced companies to look within and source more parts locally. This de-risking plan is expected to boost the local auto components industry.

“Our supplies of brakes have increased. Indian automotive suppliers are emerging as a sourcing base for components such as brakes, which were earlier imported from China,” said a brakes supplier.

Chinese firms supply between 10% and 30% of auto parts at various Indian carmakers. The maximum dependence is in the sourcing of braking and steering systems, engine parts and illumination systems.

“There has always been over-dependence on China. Now, domestic OEMs (original equipment manufacturers) will look at more localisation while increasing the dependence on other countries,” said Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India.

Hundreds of suppliers have factories in Hubei in China.

In 2018-19, automotive components worth $4.5 billion (out of a total of $17 billion) were exported from China to India.

Chinese suppliers have prioritized shipments to large Indian automakers, industry sources said.

To be sure, the industry’s transition to BS-VI emission norms may not have been in danger, said some analysts, as several parts sourced from the neighbour are sold in the aftermarket.

“While India is a net importer from China, many imported components would go into the aftermarket,” said Kausik Mahadevan, head, mobility practice, Frost and Sullivan.