Auto manufacturers have suspended operations due to heavy flooding which has caused mounting production losses, currently estimated around Rs. 1200-1500 crores.
Chennai is India’s second largest automotive manufacturing hub, home to a number of auto companies and is currently hit by one of the worst floods imaginable. The city has been disrupted completely robbing its people of basic necessities while also severely damaging the business sector. The auto industry alone is estimated to have accrued a production loss of over Rs. 1200-1500 crores in this week alone while a daily loss of Rs. 172 crore mounts further. As a result, auto manufacturers have decided to suspend operations for the interim, at least till the city attains normalcy. Here is a quick status report on some major automakers.
Hyundai – Given the condition of the city and the adjoining suburbs, Hyundai India has suspended three shifts at its manufacturing facility effective from 2nd December. Production for the engine and assembly plants has been put on hold for now in view of employee safety who aren’t in a position to travel to the plant. This has adversely affected supply for popular models like the Elite i20, Creta and Grand i10.
Renault-Nissan – Things are similar at the Renault-Nissan alliance plant in Oragadam with production suspended for a day. The company is keeping an eye on the situation and depending on the weather conditions and flood situation will start operations. Production for over 1800 cars has been affected in the said period. Fortunately, the plant, facility or warehousing has not been damaged, confirmed the company.
Ford – Ford India too has stalled operations at its facility and is waiting for the on-ground situation to stabilise before taking the next step. Meanwhile, the auto giant has seen a production loss of over 1200 cars. This will affect the company’s export operations and deliveries for the EcoSport over the next month or so.
Royal Enfield – Headquartered in Chennai, Royal Enfield has shut down all its operations including the two manufacturing facilities and offices since 1st December while the floods have also disrupted the supply chain and logistics operations. The flood condition caused the company to lose production of 4000 motorcycles last month and if the same continues, the number could escalate further in the coming days.
Apollo Tyres – Apollo’s production facility in Oragadam has suspended manufacturing in all three shifts due to flooding caused by torrential rains. Apollo produces 8900 tyres a day for different vehicles and recently announced its expansion plans at an investment of Rs. 1200/- crores increasing production to 12,000 units per day. The natural calamity has caused the tyre maker a loss of 450 million tonnes (MT).
In addition, Chennai is home to BMW, Yamaha, Ashok Leyland, Daimler AG’s truck division among companies along with a host of vendors that have set shop close to manufacturing facilities and have also suspended operations creating supply crunch of components. Around 20,000-25,000 ready cars also need to be shipped and are currently stranded due to the roads not being accessible. This will affect deliveries over new years for several models.
Even if the water recedes over the next few days, the plants will take an additional three-four days to gain normalcy and restart operations. The exact amount of damage caused to the plant, property and business can be assessed only then. Our prayers go out to the affected in the deluge and hope the city comes back on its feet soon.