Locked-out auto companies risk losing billions in exports

Mumbai: Export orders worth $4-5 billion are at stake for automakers, who have now seen production facilities shut for six straight weeks. These orders need to be fulfilled in the April-June quarter.The industry is urging the government to allow production across the entire supply chain at different hubs. Without this, the export orders can’t be honoured, say automakers. They also say servicing these orders is the best way to ensure there are no more job and salary cuts in the sector.Adding to Indian automakers’ apprehension is the fact that China’s economy is mostly up and running, with many of its factories operating at almost 100% capacity. Auto companies are worried they may lose orders to Chinese and South East Asian manufacturers. 75440659‘Opening Up Early Critical’Orders for nearly 110,000 passenger vehicles are pending, valued at Rs 10,000 crore ($1.5 billion). Auto components makers have orders worth about $2 billion. Plus, there are $500 million to $1 billion of export orders for two-wheelers, threewheelers and commercial vehicles.Multiple people tracking the auto sector spoke to ET, some spoke off record.Rakesh Sharma, executive director at Bajaj Auto, says the company is keen on ramping up production as it has Rs 1,000 crore of export orders. “With many regions yet to get a go-ahead from local administrations, first-quarter volumes are expected to see a 50% decline in the domestic market. However, it is our overseas business which puts us in a better position than others,” Sharma says.BRIGHT SPOTAnalysts expect the export market to be the likely bright spot for twowheelers in 2020, assuming sufficient production. This market can even register 5-8% growth in the current year, similar to export sales in recent non-pandemic times.Opening up early is critical, automakers say, because many overseas markets will open before India and buyers may look elsewhere.Equally crucial is the jobs/salaries question. Most automakers paid full salaries for March. April has seen no production, and cash is running out for most companies. Industry observers predict wideranging job and salary cuts in case production doesn’t resume quickly.TOUGH TO REGAIN MARKETDeepak Jain, chairman of Lumax Industries and the president of Automotive Component Manufacturers Association, says the industry has close to $2 billion of orders. He said it was tough to regain an export market once it is lost.“We are competing in the global supply chain. If you are sourcing parts from a market that is still shut, people will look for an alternative source … and getting back will be tough,” Jain says.Renault India, along with alliance partner Nissan Motor, has a pending order book position of 25,000 cars for the current quarter. Renault also ships components worth Euros 250-300 million annually to many global markets, including China.Venkatram Mamillapalle, MD of Renault India, says the industry is “urging both the central and state governments to get us back on track and get the wheels moving”.Losing export orders will be especially bad news now because the global passenger car market is expected to decline by 16.1% to 77.11 million units in the current year, the lowest absolute sales since 2011, according to Nomura.

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