The country's vehicle industry is significantly localised at around 70 % and won't be affected by the coronavirus
The Indian automotive industry is grappling with a protracted slowdown probably the worse-ever slowdown witnessed in last many decades - OEMS as well as automotive component manufacturers have been severely affected by the prevailing downbeat market sentiment. The coronavirus in China has only triggered apprehensions over whether the country’s already bleeding automotive industry will have to undergo any value chain disruptions.
And just to throw in a perspective, the concerns of the automotive industry over the coronavirus in China are only understandable. But it is important to understand that the vehicle industry may have concerns in case of non-availability of critical parts that can derail the vehicle line. “If any OEM imports even a small portion of parts that are critical in nature from China, and those parts are not available due to the coronavirus, the situation has the potential to halt the manufacturing line, says Vinnie Mehta, DG, Automotive Component Manufacturers Association of India (ACMA).
However, Mehta was quick to point out that the situation is far from being a panic-button pressing one. “I don’t think the situation is alarming as of now. Suppliers have adequate stocks till mid-March or beyond. We understand from our counterparts in China that many OEMs that are some distance away from the worst-affected Hubei province have started operations and things are limping back to normalcy.”
The auto component value chain in India is unlikely to encounter any major supply chain disruptions. This is because the overall auto component industry is significantly localised - even the vehicle industry is about 70 % localised while the rest 30 % is import, "These 30 % imported content comes from diverse geographies and not just from China alone. Overall imports from China for the Indian automotive industry would be in the range of 10-15 %. I really don't see the coronavirus deeply impacting our component suppliers in the short run,” assured the ACMA DG.
It may be worth recalling that the Indian auto component industry clocked a turnover of $ 57 billion in 2018-19. And around $ 4.1 billion of that were Chinese imports that were collectively catering to the Indian OEMS, aftermarket and component suppliers.