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FOR THE GREATER GOOD

Why car production in India suffered during its Covid oxygen crisis

REUTERS/Amit Dave/File Photo
The consequences.
  • Niharika Sharma
By Niharika Sharma

Reporter

Published

As India struggled with a severe shortage of oxygen during the second wave of Covid-19 earlier this year, automakers in the country stepped in to help—at great cost to their businesses.

Several automakers in India registered a decline in passenger vehicle production during April and May as they diverted their production capacities to make more medical-grade oxygen, according to London-headquartered data analytics firm GlobalData. Passenger vehicle production in India in May declined by 58% month-on-month.

Companies that temporarily halted car production at some of their sites between April and May were Maruti Suzuki, Mahindra, MG Motor, Toyota, Ford, Hyundai, and Honda, GlobalData said. Among other companies, in May, Maruti Suzuki tied up with three firms for producing oxygen generators, and MG Motors partnered with a Gujarat-based firm to help with oxygen production.

The initiative definitely helped struggling citizens but it hurt auto firms that have been battling a Covid-triggered slump for a while.

How did Covid-19 impact automakers?

Helping out with medical emergencies wasn’t the only reason for the drop in output for car companies.

Auto companies recorded a drop in sales due to unsold inventory in the market, ongoing supply chain disruptions due to Covid-induced lockdowns, non-availability of labour, and a massive chip shortage across the globe. 

Experts at GlobalData believe these problems will continue, at least for some time.

“Several economies are still struggling with the aftermath of the Covid-19 pandemic and the market uncertainty existing in India over a possible third wave portrays a gloomy picture regarding the exports production and local supply in the short-term,” said Bakar Sadik Agwan, senior automotive analyst at GlobalData. “Recovery to pre-pandemic levels may remain a distant dream this year.”

Despite the turmoil, there’s hope due to the significant pipeline of new launches in the coming months.

“Automakers such as Tata Motors and Hyundai have remained resilient to the Covid-19 turbulence with a strong product portfolio,” Agwan said.

The first half of 2021 witnessed a long list of car launches such as the MG Hector Plus, Tata Safari, Renault Kiger, Citroen C5 Aircross, Hyundai Alcazar, and Skoda Kushaq. Likewise, some major launches and updates are expected in the second half of the year, which can push the growth in output.

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