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This is how coronavirus has hit the global auto industry

Not a day passes by without an automaker either suspending operations or operating with minimal workforce to keep Coronavirus at bay. Indian automakers, like their global counterparts, are following suit

The outbreak of the Novel Coronavirus (COVID-19), which originated in Wuhan, China in end-December 2019, is fast spreading its tentacles across the world and is having a major impact on all aspects of society, including the automotive industry. All through January and February, automakers and their suppliers have been scrambling to keep vehicle assembly lines humming but March has seen the industry take concerted action, in sync with government advisories, to keep its personnel safe.

With the World Health Organisation declaring the COVID-19 outbreak a pandemic, an unprecedented global disruption is at hand. Automobile and component manufacturing plants are being shuttered around the world, consumer footfalls in showrooms have fallen sharply, vehicle sales are dropping dramatically and almost every major industry event is either being canceled or going the digital way. All of March has been packed with coronavirus-related news and it all started with the cancellation of the 2020 Geneva Motor Show, which was to open on March 5.

Here is a timeline detailing how COVID-19 has impacted the automotive industry around the world, and in India.

● Suzuki Motorcycles India Pvt Ltd has suspended production at its Kherki Dhaula, Gurgaon plant in accordance with the directives issued by the Haryana Government. The two-wheeler manufacturer has said that that production will remain suspended till further notice issued work from home advisory to its employees.

● Toyota Kirloskar Motor has temporarily halted production at its plant in Bidadi, Karnataka along with saying that it has laid out work from home directives to its employees working in the company’s regional offices. The carmaker has not revealed a proposed date of re-commencing production.

● Hyundai Motor India has announced the suspension of production at its Chennai plant with effect from March 23, 2020, till further notice. The carmaker has said that the plant will resume operation based on further notifications from the Karnataka Government.

● Honda Cars India has announced that it will be suspending production at its Greater Noida and Tapukara plants with effect from March 23, 2020. The carmaker has said that it will be looking to resume operations from April 1 subject to advise from government and health authorities and market conditions.

The carmaker has also said that it has asked its office staff to work for the home with only employees engaged in essential services requiring to be physically present.

● Maruti Suzuki has announced that it is temporarily shutting operations at its production facilities in Haryana – Gurugram and Manesar – along with saying that it’s Research and Development center in Rohtak will remain closed. The carmaker has that the shutdown is in accordance with the government policy and its extent will depend on future policy announcements.

● Mahindra and Mahindra have announced the temporary suspension of manufacturing operations at its Nagpur, Chakan, and Kandivali plants till March 31, 2020. Operations at the Nagpur plant have been suspended with immediate effect, with the Chakan and Kandivali plants to suspend manufacturing operations from Monday night, March 23.

The carmaker has said that it is continuing to monitor the situation and will take appropriate action on other plants across the country. The carmaker had previously announced work-from-home measures for its offices, earlier in the week.

● Hero MotoCorp has announced that it is suspending production at all its facilities across the globe and at its Global Parts Centre in Rajasthan with immediate effect, till March 31, 2020. The company, though, has said that its other functions, including its Centre of Innovation and Technology, will continue to function on a work-from-home policy, except for employees whose physical presence is required to run essential day-to-day services.

● Fiat Chrysler Automobiles (FCA) has announced the suspension of production and temporary closure of its plant at Ranjangaon, Maharashtra, with immediate effect, citing the rising number of COVID-19 cases in the state. The manufacturer has said that the suspension will be in effect till March 31, 2020, with only employees engaged in emergency services continuing to staff the facility.

The carmaker has said that it will be undertaking a cleaning and sanitation drive, including fumigation, at its facility during the temporary closure. FCA has also iterated that the closure will result in no job losses and that all employees will continue to receive pay during the period of closure.

 Bugatti has suspended production at its plant in Molsheim, France. In a statement, the hypercar manufacturer said necessary regulations implemented by European governments to combat the COVID-19 pandemic make it impossible, amongst other things, to maintain the supply chain of production and spare parts. In addition, it is almost impossible to deliver vehicles completed in the Atelier to their owners due to the travel restrictions.

● Hyundai India has announced a series of measures as COVID-19 cases continue to rise in the country. Adding that it has advised its employees to work remotely, the company has set up a preventive thermal screening for its employees and has asked dealer and vendor partners to strictly follow government advisories. Hyundai will also offer a 2-month extension to customers who are unable to avail of their vehicle’s warranty / extended warranty / free service due to a health emergency or dealership shutdown in affected cities. The company will also continue to offer 24×7 Roadside Assistance and has deployed an additional 1,000+ Doorstep Advantage bikes and emergency road service cars.

● Apollo Tyres’ top management has announced a voluntary reduction in pay due to the impact of COVID-19 on the automotive industry. Company Chairman and MD Onkar S Kanwar and Vice Chairman & MD Neeraj Kanwar have accepted a 25 percent reduction in their salary. Furthermore, other senior executives have also taken a voluntary 15 percent reduction in their salary in a show of solidarity due to the rapidly deteriorating market conditions.

● Toyota Kirloskar Motor’s regional Strategic Business Units in Delhi, Mumbai, Kolkata, and Bangalore to operate with temporarily reduced headcount [50%]. The selection of such 50 percent staff would be done in such a way that there is minimal business impact and also to minimize the risk of staff health. The balance 50 percent of the staff will work from home.

● In consultation with Volkswagen Group and the KOVO union, Skoda Auto suspended production at its Czech plants in Mladá Boleslav, Kvasiny and Vrchlabí at 10 pm on March 19, for an initial period of minimum two weeks. The company says, the factories are being shut down in an orderly manner in close alignment with the supply chain to ensure a smooth process. As things stand, operations are scheduled to re-commence on April 6. Meanwhile, the production of Skoda models has resumed at the Chinese plants. In India and Russia, manufacturing is continuing according to plan.

● Honda has suspended production at its UK plant, where the Civic hatch is built, “in light of increasing difficulties with supply chains and considering the wellbeing” or staff. The firm says it intends to restart production on 6 April, dependent on government advice and market conditions.

● The Driving Vehicle Standards Agency has postponed all driving tests in the UK due to take place today and tomorrow. In Northern Ireland, driving tests have been suspended for three months.

● Both Ford and GM will suspend production at their North American factories until at least 30 March. The two firms say they will take the time to clean and sanitize their plants in the USA, Canada, and Mexico, and both are in talks with unions about keeping workers safe when production resumes. Audi has also suspended production in its Mexico plant due to supply chain issues.

● Hyundai has suspended production at its US factory in Alabama after a worker tested positive for Covid-19. The firm is working with local officials to sanitize the site and determining when it safe for production to resume. 

Hero MotoCorp, India’s largest two-wheeler OEM, sets up a task force to respond to the Coronavirus outbreak. Employees have been told to work from home every alternate day, and non-essential travel and physical meetings have been discontinued. The company says it is well prepared with a contingency plan.

● The Le Mans 24 Hours has been moved back from its planned 13/14 June date until 19/20 September. The organizers say the delay will involve rescheduling several rounds of the FIA World Endurance Championship. 

The world’s most prestigious endurance race was first held in May 1923 but has since been run in June, with two exceptions. In 1956, the event was held in July, while in 1968 civil unrest in France caused the event to be delayed until September. The race has been canceled 10 times: in 1936 due to a labor strike, and between 1940 and 1948 due to World War Two. 

● Rolls-Royce has confirmed it will suspend production at its Goodwood manufacturing plant from Monday, March 23. The suspension is currently planned for two weeks and leads into the already scheduled two-week Easter maintenance shutdown. It added that day-to-day operations will be assured by non-production staff at the company’s head office, or working remotely.

Company boss Torsten Müller-Ötvös said: “This action has not been taken lightly, but the health and well-being of our exceptional workforce are first and foremost in our minds.  We are a tight-knit community at the Home of Rolls-Royce and I have no doubt that our resilience will shine through during this extraordinary time.”

● Porsche has announced that it will stop production for an initial period of two weeks. The decision will affect its Zuffenhausen and Leipzig plants in Germany, with the suspension starting from Saturday, March 21. The firm cited the protection of its personnel due to coronavirus, but added that bottlenecks in its supply chain no longer enabled “orderly production”. The firm also said it is anticipating a decline in demand.

● Toyota is suspending production at all of its European plants, including its two UK facilities in Burnaston, Derbyshire, and Deeside, Flintshire. 

● The BMW Group is also in the process of halting production at all of its European factories, along with its site in South Africa. They will all be closed by the end of the week and is currently scheduled to last until April 19.

● Honda will suspend production at all of its North American plants for six days from 23 March, due to an “anticipated decline in market demand”. It said it will continue to pay staff fully during the suspension, and will also utilize the period to enhance deep cleaning measures. The move will affect plants in the USA, Canada, and Mexico.

● The Tesla factory in Fremont, California is set to be forced to close, with officials in Alameda County having reportedly determined it is a “non-essential” business. The plant was originally set to stay open despite a “stay at home” order in the county, but county spokesperson Sargeant Ray Kelly told The Mercury News: “If Tesla was a hospital if Tesla was a laundromat if Tesla was a mechanic shop, we wouldn’t be having this conversation. But Tesla makes cars, and that’s not essential for us to get through this health crisis.”

● Mahindra & Mahindra announced a ‘work from home’ (WFH) policy, from March 18-31, for 7,000 desk-based staffers. However, the company’s manufacturing and R&D operations will continue functioning. 

● FCA India, which retails the Jeep brand of SUVs, says it “has permitted over 50% of its staff in its Mumbai and Pune offices to work from home, at least until March 31, 2020, and is taking proactive measures to ensure ‘social distancing’, which is the need of the hour.”

● FCA, which operates from three locations in India – Corporate Office in Mumbai, an Engineering office in Pune and the main Engineering Centre in Chennai – says it has prioritized the option of ‘work from home’ (WFH) for its staff in Maharashtra based on precautionary advisories by the government of India and also the State Governments. The WFH alternative for the mission-critical engineering workforce in Chennai is under consideration and not in play as yet.

● Volvo Car India announced a ‘work from home’ strategy as a safety measure with immediate effect. As part of its overall health and safety plan to mitigate risks associated with Covid-19, the company said the “the necessary IT infrastructure is in place to facilitate business continuity, with scheduled meetings managed via Microsoft Teams/ Skype.”

● Federation of Automobile Dealers Associations (FADA) approaches the Supreme Court to extend the cut-off for sales of BS-IV vehicles to May 31 as retail sales have nosedived due to the impact of Coronavirus. According to FADA president Ashish Kale, “In the past week, there has been a drastic drop in sales and customer walk-ins have reduced to a trickle as caution sets in due to fear of spreading of the virus. Counter sales have fallen by 60-70% across auto dealerships. The situation has worsened in the past 3-4 days with partial lockdown situations in many towns and cities and few district magistrates have started issuing notices of the closure of shops and establishments including auto dealerships to stop the spread of the virus. Many of our members may face dealership closures if leftover with unsold BS-IV stocks.”

● Ford will suspend production at its factories in continental Europe from Thursday 19 March. The decision, which the firm expects “will continue for a number of weeks” will affect two plants in Germany and one in Romania. The firm has already suspended production at its Valencia factory after three workers were confirmed with coronavirus. The firm’s two UK engine plants are not affected. The firm added that while dealerships in some countries have temporarily closed their sales operations, its dealers are committed to “provide essential maintenance and service across the continent.”

● The Volkswagen Group is shutting down most of its factories in Europe, with boss Herbert Diess saying that it’s “almost impossible” to forecast the company’s 2020 financial performance.

● Volkswagen India’s plant in Chakan, near Pune, is not facing any major production disruption yet because it’s already on a 3-week production shutdown, starting Monday, March 16. The company says this shutdown is to prepare the production lines for the new set of models based on the new MQB A0 IN platform that will drive the global major’s ‘India 2.0’ strategy in the marketplace. 

Though there could have been a potentially serious impact in production due to disruption in supplies from the virus outbreak affected automotive hubs outside of China. Volkswagen started production of BS-VI cars in February as planned, though there would be a delay in the production of vehicles with automatic transmissions sourced from Japan. The delay could be a “maximum” of two to three months. “It (production shutdown timing) fits pretty well in the current environment. We are also supporting people to stay at home. So far, we have managed to work around it,” said Steffen Knapp, Director, Volkswagen Passenger Cars India.

However, the company has had to shut its 120,000 square feet spare parts warehouse in Gurgaon, one of three in the country, after the local administration issued an advisory to shut down operations of offices and industrial units in order to contain the virus outbreak. Vehicle sales are also affected as some states have advised dealerships to suspend operations in the wake of the virus outbreak. While monitoring the constantly developing situation closely, Volkswagen and other industry peers would also brace themselves for some challenging times.  “The customers have something else in their mind if it’s getting to their health, so they may not think of purchasing vehicles,” said Knapp.

● The Tesla factory in Fremont, California, US is remaining open, despite a “shelter in place” lockdown being issued for the area in which it’s located. The plant, where the Model 3 is produced, has been deemed an essential business by Alameda County. According to the Los Angeles Times, Tesla boss Elon Musk has emailed the plant’s 10,000 workers saying they can stay at home if they feel unwell or uncomfortable.

● The UK government is in talks with major automotive manufacturers, including Ford and Honda, about producing ventilators for the NHS in their UK production facilities. The idea has precedent: in China, the car industry is already helping to battle the spread of coronavirus. Chinese carmaker BYD has created production lines at its Shenzen facility to produce face-masks and disinfectants. It says that it’s producing 300,000 bottles of disinfectant and five million masks per day, making it the world’s largest producer of the latter product.

● The PSA Group will stage phased closures of all of its factories across Europe, including the Vauxhall plants at Ellesmere Port and Luton. 

● Ford has closed its factory in Valencia, Spain after three workers tested positive for Covid-19. In a statement, Ford said: “We have had three positive cases for Covid-19 on the Valencia site in a 24-hour period, two of which involved more isolated workers that did not enter the assembly operations. We are taking quick action to follow the established protocol, including the identification and self-isolation of all employees who had close contact with the affected workers. We will take all other appropriate steps to ensure that risk from this situation is minimized.”

● Ford India said it is continuing to act in real-time to keep its “people safe and help limit the spread of the virus in communities where we live and work. Therefore, starting Monday, March 16, we have instructed much of our Indian workforce (over 10,000 people) including Ford India and Global Business Services – except those in business-critical roles that cannot be done away from Ford facilities – to work remotely until further notice.”

A PTI report has it that the Ford India spokesperson added, “All necessary safety measures have been deployed at Ford locations as well as our dealerships to ensure minimum inconvenience to customers.

● Tata Motors’ PR releases an ‘internal memo’ written by CEO and Managing Director Guenter Butschek. It reveals that the company has in place a three-tiered response plan to reduce the risk of coronavirus to its employees. 

● Fiat Chrysler Automobiles is closing the majority of its European plants until March 27, including six in Italy and those in Serbia and Poland. Ferrari will also close its Maranello factory, while Italian brake manufacturer Brembo is also shutting down. 

● The World Rally Championship event in Mexico was halted early so that the competing teams would have extra time to get home, given the increase in travel restrictions. The next event, Rally Argentina, has been postponed. 

● Daimler postpones Annual Shareholders’ Meeting: An email to the media states that “After weighing all aspects, especially the health of all participants and after the order of the responsible health department, Daimler AG has decided not to hold the company’s Annual Shareholders’ Meeting as scheduled on April 1, 2020, but to postpone it to a later date in 2020.”

● The Australian Grand Prix was canceled by Formula 1 bosses just hours before the practice was due to begin on Friday, following McLaren’s withdrawal from the race due to one of its team members testing positive for coronavirus.

The decision by Formula 1 and the FIA, motorsport’s governing body, was announced on Friday morning in Australia, with fans already queuing for admission to the street circuit in Albert Park, Melbourne. It was made after discussions between F1 bosses, the FIA, Australian Grand Prix organizers and the 10 teams over whether the event should proceed.

A statement from Formula 1 and the FIA said, “This is very disappointing news for the thousands of fans due to attend the race and all ticket holders will receive a full refund and a further announcement will be communicated in due course.”

● Toyota Kirloskar Motor (TKM) has announced that in light of the current outbreak of the Coronavirus (COVID-19) and the fight against the pandemic, it has taken preventive measures to safeguard the health and safety of all stakeholders including customers, employees, and dealer partners. The OEM says it has been closely monitoring the evolving situation and responding appropriately in accordance with guidance issued by the government.

● Five days before the 2020 Geneva Motor Show – billed as the biggest show on the global automotive calendar – was due to open to journalists on Tuesday, March 3, the organizer International Organization of Motor Vehicle Manufacturers (OICA) canceled the event. This was after several confirmed cases of COVID-19 in Geneva and other parts of Switzerland came to light. At the time, there was a substantial outbreak of the coronavirus, in northern Italy, with cases announced in a number of other European countries.

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