Scourge Of Coronavirus

Scourge Of Coronavirus

Editor's Desk March 2020 Scourge Coronavirus

Dear Readers,

For the first time in 80 years, there will be no Geneva Motor Show this year. The premier European motor show, one of the most anticipated auto shows globally, first held in 1905, would have had its 90th edition this month. But health concerns over the spread of coronavirus (COVID-19) has prompted Swiss authorities to bar gatherings of over 1,000 people anywhere across the country until at least March 15, 2020. Reportedly, the last time the show was cancelled was when France declared war on Germany. That was 1940.

Earlier this year, just about the time when Wuhan in China grabbed global headlines for being the nerve centre of the virus outbreak, there was some sense of nervousness in the Indian industry as well. The Auto Expo was just round the corner, and Chinese manufacturers had booked a sizeable 20 % of floor space at the Expo Centre in Greater Noida, in addition to the 200+ suppliers who were looking to showcase their fare at the components show. There was palpable tension all around. The government’s restrictions on travellers from China just before the expo began, added to the industry’s dismay.

Nonetheless, unlike the Geneva Motor Show, the New Delhi Auto Expo went ahead as planned, and ended successfully too. But the impact the virus outbreak has had or could have in the near to long term, was not lost on anyone. OEMs as well as Tier I suppliers, who have exposure to the supply chain in China, were mindful of the fallout coronavirus could have on their businesses.

China accounts for a significant 27 % of India’s automotive components imports, and most companies have considerable dependence on Chinese products, particularly electronic components such as printed circuit boards, for instance. At a time the industry is transitioning to BS VI emission norms, supply constraints could severely impair production.

Although there are some reports that have negated any major impact of the virus on the Indian industry, many senior professionals we spoke to, aren’t too confident. Some suppliers have, in fact, started scouting for Indian alternatives to their Chinese suppliers, primarily in the Tier II and Tier III segments.

For an industry already reeling under a severe slowdown, the outbreak of coronavirus could not have come at a worse time. The Indian automotive industry is known for its resilience and quick technology turnarounds. Only time will tell what effect this would eventually have on businesses, but like the wise men often say, “this too shall pass.”

March 2020, New Delhi