Yamaha Motor India Group Chairman Motofumi Shitara believes the prolonged lockdown has done little to help the cause of the economy. “Extending the lockdown has definitely impacted the Indian economy severely. I would say shutting down economic activity completely was uncalled for,” he told BusinessLine in an interview.

From Yamaha’s point of view, this is particularly significant since India is “one of the world’s largest economies” and the largest producers of motorcycles and scooters globally.

“A proper roadmap and approach was required to deal with this crisis. Saving both human lives and the economy should have been the government’s priority,” said Shitara. He was quite categorical that, be it India or the rest of the world, the recovery process post-Covid would take a long time.

Even as people around the world are gradually emerging outdoors after being cooped up in their homes for months, the WHO has warned that the virus may never go away. Concerns are growing about a second wave of infections and, perhaps, a third.

Living with corona

Hence, in such a situation, “we may have to learn to live with corona and everyone should start thinking in this direction”. Yet, as Shitara said, it is not as if it is all doom and gloom. “Amidst all this uncertainty, there is a ray of hope and a good opportunity for the two-wheeler industry,” he explained.

Survey results, for instance, have indicated that the sector is bound to “get back on its feet” and see some good sales. “There is also belief within the industry that more consumers would like to travel on their own in their personal two-wheelers rather than crowded trains or buses to maintain social distancing,” said Shitara.

According to him, the impact of Covid-19 on the automotive supply chain has been the “strongest”, both at global and local levels. Even after permissions were granted for the operation of non-essential businesses, the disruptions in the supply chain will “continue to be a matter of worry” as many of the suppliers are located in the containment zones.

De-risk strategy

“In such a scenario, a de-risk strategy is very much required to ensure that an uninterrupted value chain is in place,” said Shitara. A practical option would be to have a vendor park in the vicinity of factories which is precisely what Yamaha did when it set up its Chennai facility five years ago.

“We had established our factory and the vendor park in 2015 keeping all these challenges in mind,” said Shitara. The objective was to make the new production base “highly efficient” while reducing losses in production management and distribution to “extremely low levels” in the overall engineering and manufacturing process.

“Even the local suppliers must keep innovating and enhancing their R&D skills to meet the requirements of OEMs,” added Shitara. Having a vendor park close to the factory, that can meet the needs of components in daily production, will “help in a big way in dealing with such crisis situations in future”.

At a global level, there are many countries which believe that the Covid-19 crisis is an eyeopener from the viewpoint of excessive dependence on one region — China — for sourcing components. Yet, it is not as if alternative supply chains can be created overnight; China’s sheer economies of scale are tough to match up to.

“It will depend on individual firms, on how they decide to sustain their production and supply chain,” said Shitara. The pandemic has come as a grim reminder of the risks involved in centralisation of production bases. According to him, manufacturers should ideally “decentralise and diversify” production bases to avoid a “complete shutdown” of the supply chain.

Adding to the trouble

For the Indian auto industry, Covid-19 could not have come at a worse time, especially when manufacturers were getting set for the era of Bharat Stage-VI emission norms, which kicked in last month. “The industry has made huge investments in the transmission from BS-IV to BS-VI emission norms and we require adequate time to recover the costs,” said Shitara.

In this backdrop, he continued, it is important for the Centre to provide “all its support” in helping the auto industry revive from the current crisis. This should involve announcement of measures that will “address the liquidity crunch, demand, and supply chain disruptions”.

The Yamaha India chief was also of the view that a reduction in GST rates would be “a big relief” for the industry. “The priority right now should be to generate demand without putting additional burden on the auto sector,” he said.

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