Coronavirus Outbreak Affects TVS Motor's Production By 10% In February

The Coronavirus outbreak has affected major component supply for TVS Motor Company, which has become second Indian auto major to announce a production cut.

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Highlights

  • TVS says its dependency for components from China is limited
  • Tier II suppliers are severely impacted due to the outbreak, says TVS
  • TVS is looking at other alternatives to source components

TVS Motor Company has become the second major Indian two-wheeler manufacturer to announce a production cut, due to the ongoing Coronavirus outbreak in China. The company has said in a regulatory filing that its planned production in February 2020 will see a 10 per cent drop. Earlier this month, the world's largest two-wheeler maker Hero MotoCorp also announced a 10 per cent cut in production for February citing the pandemic Coronavirus as a major reason with the limited supply of crucial components. The production cut will affect the manufacturing of the brand's BS6 compliant models with the supply of certain components constrained, the two-wheeler maker said in a release.

Also Read: Coronavirus Affects Hero MotoCorp's Production By 10% In February 2020

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Commenting on this development, KN Radhakrishnan, Director & CEO, TVS Motor Company, said "At TVS Motor Company, we have completely transitioned to BS6 in the month of January 2020. To minimise the impact on the production of BS6 vehicles, we are consistently monitoring developments with those of our suppliers who are sourcing certain components from China. Parallelly, we are also exploring suppliers in other regions and are looking to localise within India. As a customer-centric organisation, our endeavour is to ensure that the impact on our customers and operations is minimal."

TVS says its dependency on China for components is limited and a few Tier II suppliers have been impacted adversely due to the production slowdown in China. That being said, components sourced from China do form a key part of the global supply chain for the manufacturer.

Also Read: Auto Components Supply Could Be Disrupted If Coronavirus Persists Longer: ICRA

Manufacturers usually stock up component inventories for about four weeks and that should keep production going for the next couple of weeks. But the prolonged shutdown of plants in China will force automakers to look at other locations to source parts. TVS has also said it is looking to source components from within India if needed.

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More recently, ICRA warned that the automotive components supply chain could be affected gravely if the outbreak persists. Meanwhile, signs have been limited about the breakout slowing down. The virus has seen over 81,000 cases globally with over 2700 deaths, according to official data available online. Major manufacturers have temporarily shut shop in China, while automakers globally have trimmed production due to the supply constraint of components.

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