Indian auto industry to get back to normal by June 2021: Vikram Kirloskar

Amidst the highly unprecedented coronavirus outbreak and the economic slowdown leaving the auto industry by storm, ETAuto discusses its impact and future recovery with yet another expert, Vikram Kirloskar of Toyota Kirloskar Motor.

Once we come out of the pandemic outbreak and the subsequent lockdown, the auto industry will get back to its original pre-COVID-19 production by June 2021, stated Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor (TKM) at the ETAuto TownHall conducted on Friday.

Counting the positives, Kirloskar stated that there is liquidity in the banks and RBI Governor has rightfully pushed a lot of it, which will be beneficial for retail financing of the industry.

Further asserting his confidence in the Indian automotive industry, the fourth generation member of Kirloskar Group mentioned, “India manufactures capital goods and it has a big internal market. Alongside, we also have a highly skilled workforce, an abundance of natural resources and required raw materials.”

However, as of now, he expects that it will take almost three months to get into a smooth flow of production due to supply chain issues.

“Auto industry will restart. The first half of this year will go by in trying to get back on our feet. Hopefully, the second half will pick up,” he noted.

Referring to a chicken and egg situation, Kirloskar said that there are as much as 15 to 20 days of vehicle stock with manufacturers and dealers. So we cannot expect the OEMs to fully restart their production until the dealerships open, customers have retail financing and the already piled up vehicles start moving into the market.

According to him, a vehicle cannot be produced even with 99.99 percent of parts. It has to be 100 percent. “As of now, there are a lot of green zones in the country, however auto industry’s supply-side majorly falls in the red zone,” he added.

Terming the auto industry to be globally integrated, Kirloskar highlighted that the entire supply chain is somehow disturbed due to the global pandemic. “Even though an OEM may not import anything from a particular country, it does have a cross production or part supply relationship with the parent company in that region,” he told.

As per industry leader, another big challenge is for Tier-II suppliers as they do not have cash reserves in abundance. “These are medium and small scale industries, which are not highly capitalised. They tend to be owner-owned, having smaller pieces of land with considerably less resources.”

He further explained that these suppliers have a migrant based workforce, which will again add to their pains of restarting their factories, thereby leaving a gap in the supply chain.

As the President of Confederation of Indian Industry (CII), the industry expert seemed highly positive about the government's engagement and support for the auto sector. “I am hopeful something will come out,” he said.

Further supporting the government’s decision on lockdown and looking at the odds from around the world, Kirloskar feels that we need to setup the process and guidelines of restarting and reorganising our factories, beforehand.

“We cannot deny that there will be high chances of one out of 3000 getting infected,” he underlined while contemplating that shutting down again will not be the best choice.

Automobile dealers also need to communicate with their customers to make them feel safe about their dealerships. They must relook at their business models to cut down on expenses, explained the business leader.

Vikram Kirloskar seemed positive about the electric vehicle story in the country. “TKM will meet CAFE-II regulations by 2022 because we had already started the work and we are working on that. However, it is going to be difficult as money resource crunch is bound to happen for everyone.”