India auto production to shrink by 8.3% in 2020; coronavirus may hit supply

Fitch Solutions came out with this estimate and said it believes that the weak domestic demand for new vehicles will see India's vehicle production continue to contract in 2020.
By : PTI
| Updated on: 12 Feb 2020, 12:26 PM
FILE PHOTO: Cars are seen parked at Maruti Suzuki's plant at Manesar, (REUTERS)
FILE PHOTO: Cars are seen parked at Maruti Suzuki's plant at Manesar, (REUTERS)
FILE PHOTO: Cars are seen parked at Maruti Suzuki's plant at Manesar, (REUTERS)
FILE PHOTO: Cars are seen parked at Maruti Suzuki's plant at Manesar,

Fitch Solutions on Wednesday said it expects vehicle production in India to contract by 8.3 per cent in 2020 as the auto industry faces increasing risk of supply shortage due to China's coronavirus outbreak, possibly hitting domestic output if the virus spreads in the country.

In China, where the virus originated, automotive manufacturers have halted production in order to limit the congregation of people and reduce the exposure of its population to possible infection and "we see India adopting similar policies if the virus spreads throughout the country," it said.

Given that India's health care system is ill-equipped to deal with a large scale epidemic, the rating agency said "the impact on Indian autos will be much larger because the virus will likely spread much faster in the country when compared to China".

Similar Cars

Find More Cars
Tata Tigor Ev (HT Auto photo)
Tata Tigor Ev
Electric | Automatic
₹11.99 - 13.14 Lakhs**Ex-showroom price
Tata Altroz Ev (HT Auto photo)
UPCOMING
Tata Altroz Ev
 
₹12 - 15 Lakhs* *Expected Price
Tata Nexon Ev (HT Auto photo)
Tata Nexon Ev
Electric | Automatic
₹13.99 - 16.85 Lakhs**Ex-showroom price
Tata Nexon Ev Max (HT Auto photo)
Tata Nexon Ev Max
Electric | Automatic
₹17.74 - 19.24 Lakhs**Ex-showroom price
Mg Zs Ev (HT Auto photo)
Mg Zs Ev
Electric | Automatic
₹21 - 24.68 Lakhs**Ex-showroom price
Mg Zs Ev 2022 (HT Auto photo)
Mg Zs Ev 2022
Electric | Automatic
₹21.99 - 25.88 Lakhs**Ex-showroom price

Furthermore, because China is one of India's largest supplier of automotive components, a slowdown in the supply of China-made components will lead to shortages in India and could force auto makers to slow or stop production.

As a result, we forecast vehicle production in India will contract by 8.3 per cent for 2020, following an estimated contraction of 13.2 per cent in 2019.

The agency said that it believes that the weak domestic demand for new vehicles will see India's vehicle production continue to contract in 2020.

"China supplies India with between 10-30 per cent of its automotive components, and this could be two to three times higher when looking at India's EV segment, which highlights just how exposed India's automotive manufacturing industry is to the slowdown of vehicle Chinese component manufacturing," it said.

Fitch also believes that the protectionist policies presented in the country's 2020 Budget with regards to electric vehicles will offer some upside potential for local EV production, but it will be accompanied by increased trade risk.

First Published Date: 12 Feb 2020, 12:26 PM IST
Recommended For You
View All
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city
By clicking VIEW OFFERS you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city