Auto supply chain hit as Covid-19 strikes hub – business news

A complete lockdown in Maharashtra’s Aurangabad district due to a flare up in Covid-19 cases proposed from July 10 will disrupt key auto supplies across the country, executives from several large auto companies based in the city told Mint. Aurangabad, which is a well known auto manufacturing hub in western India is home to manufacturing plants of Bajaj Auto and Skoda Auto India also houses a well developed ecosystem of auto ancillaries and is a key supply base for the two wheeler industry.

“Every two-wheeler manufacturer has dependency on the vendor ecosystem based in Aurangabad for some or the other part. The Bajaj Auto supply chain practically supplies into all major OEMs (original equipment manufacturers),” said a senior executive at a large tier-1 vendor, requesting anonymity. “We are trying to produce as much as we can in two shifts. We are building up the stock. But it is not easy to ramp up amid labour concerns,” the executive said, adding that it is a time of extreme stress.

Key components manufactured in these facilities include forged and machined parts, castings, wiring harness, head and tail lamps, switches, engine parts, among others. Even as the suppliers are concerned about losing domestic and export orders, forced plant shutdowns would result in disrupting supplies to all leading two-wheeler companies based in the north and south regions.

The decision to impose lockdown in Aurangabad is taken on the back of recent surge in the Covid-19 positive cases in the city. The industrial city has reported near 7,000 cases and about 300 casualties due to the virus infection. In Bajaj Auto more than 300 workers have tested positive and six people have died since the outbreak.

Rahul Dhoot, managing director, Dhoot Transmission Pvt Ltd, a tier-1 supplier of wiring harness to Bajaj Auto and several other manufacturers warned that closing down manufacturing plants will create a supply side shock to the auto industry. “Complete lockdown has a cascading impact on the supply chain. It affects the customers who are located outside of Aurangabad. We supply to 6-7 customers based elsewhere from our production units in Aurangabad. If we are not able to supply parts to them in time then their assembly lines will come to a halt,” Dhoot said.

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