Skoda Auto Volkswagen India suspends production in Pune as part of India 2.0

Czech carmaker Skoda Auto has reported that production at its Pune plant has stopped. The Pune facility was planned as part of Skoda's India 2.0 project, which aims to deliver the company's SUV offensive in India. The Pune plant is currently being converted for the manufacturing of a new model family.

In February, Skoda India unveiled the much awaited Vision IN compact SUV in the country in a bid to challenge established players in the highly lucrative as well as competitive segment. The Czech company will officially launch the car at a later date in the year.

Skoda has had its back to the wall in India for some time now with most of its offerings here failing to corner much traction in the market. With established rivals as well as several new players dominating the field of play, the Czech manufacturer plans to hit big and introduce five new and updated cars in 2020.

Skoda has also reported that manufacturing at its Aurangabad plant continues, although at a marginally reduced capacity.

Globally, the coronavirus pandemic appears to have taken a toll on Skoda just as it has on most other major auto manufacturers.

In Europe, Skoda Auto has reported at least three confirmed Covid-19 positive cases among its workforce. The company has decided to suspend production at its Czech plants at least for the next two weeks.

In a statement released on Thursday, Skoda Auto said the decision was taken after consultation with the Volkswagen Group and the KOVO union.

Production at Skoda’s Czech plants in Mladá Boleslav, Kvasiny and Vrchlabí were stopped from Wednesday night, for an initial period of minimum two weeks. The factories are being shut down in an orderly manner in close alignment with the supply chain to ensure a smooth process.

Skoda Auto also said that the operations are scheduled to resume on April 6, depending on the situation.

Reacting on the suspension of production facilities, Skoda Auto CEO Bernhard Maier said, “With 37,000employees in the Czech Republic alone, our responsibility extends far beyond the factory gates. Everything must be done to slow the spread of the virus in order to protect and help those who will be particularly affected – most notably the elderly and people with underlying health conditions. In addition, the sales channels in most markets have also collapsed due to government measures."

At Skoda Auto, there have been three confirmed cases of coronavirus as of March 19. The company reported the three workers are in a stable condition. Skoda has also ensured that workstations are properly disinfected to prevent the virus from spreading further. As a precaution, several Skoda employees are self-isolating at home.

Skoda has announced that all employees will receive 70per cent of their average wage at the start of the production shutdown (18to 29March2020), and 75per cent from 30March to 5April2020.

While Skoda said it will bear the initial cost to tackle the situation currently, but it also sought government’s help in the European countries where the virus has impacted business. The Skoda statement says, “The company’s primary goal is to keep all staff members employed during this time. As the board of management has emphasised, the effects and duration of this crisis cannot yet be predicted at this time. The industry and companies in the Czech Republic are faced with an enormous burden. Therefore, as in other European countries, government support should be provided.

In association with the unions, Skoda is holding discussions with the government regarding this matter. The sales markets have been severely affected – also due to the decision of some governments to close down the retail sector.

In India too, Skoda has said it is taking every possible precaution to ensure safety of its employees and customers. "Skoda Auto Volkswagen India is adhering to guidelines and advisories from government authorities while implementing all possible measures to ensure the safety of its employees and the community at large. In addition to stringent travel restrictions, self-quarantine for employees who have recently returned from other countries, the organization is also encouraging employees to work from home to minimise the risk of exposure while ensuring business continuity," a company spokesperson said in a statement.

(Note: Skoda Auto Volkeswagen India has reached out to HT Auto on this report. The company has stated that the developments at Pune plant was part of its India 2.0 project and therefore, a pre-planned development since January. Also, the plant at Aurangabad is working at marginally reduced capacity and not 'significantly reduced.' The changes have been incorporated in the headline and report accordingly.)