Supply chain disruptions will make it difficult for vehicle makers to restart operations, according to Vipin Sondhi, MD and CEO of truck and bus maker Ashok Leyland Ltd.
“Auto OEMs are dependent on the ancillary sector. A smooth flow of the complete supply-chain is vital for the production of vehicles,” Sondhi said on Thursday.
While the government has given the auto sector permission to resume operations in a phased manner in some geographies, maintaining certain norms and conditions, it still remains a challenge for the industry to reboot. This because while the OEM production unit might be in the green zone, even if one ancillary unit that supplies a small part happens to be in the red zone, the component will be unavailable, making the production process impossible, said Sondhi.
The need of the hour is for the industry to collaborate with the local agencies to ensure a smooth supply chain, he added.
The company’s factories at Alwar, Bhandara and Pantnagar had received permission from the relevant government authorities to resume operations.
A few days ago, a Crisil study revealed that vehicle makers had a high dependence on the Delhi-NCR and Maharashtra clusters because major OEMs are located here, and OEMs based out of these clusters generally source about half of their requirements locally to optimise logistics.
Any prolonged impact of Covid-19 and lockdowns on component manufacturing in these clusters would hence hurt supplies to all auto OEMs, it said.