Post the lockdown phase, the entire automotive ecosystem comprising suppliers, manufacturers and dealers will face issues related to capital crunch, scarcity of components and labour shortage, opines Satyakam Arya, MD and CEO, Daimler India Commercial Vehicles
Impact on Business and Recovery Strategy
The good thing is that we managed to sell our entire stock of BS IV vehicles by the deadline of March 31, 2020. The last of the shipment was cleared just before the lockdown. In the first quarter of this year, we reached a milestone of selling 1 lakh BharatBenz trucks in India. Meanwhile, it has been for the first time in history that the automobile segment recorded zero sales in the month of April.
Daimler India Commercial Vehicles has been supporting the fight against the ongoing virus pandemic in many ways, such as:
- We have been actively involved with HPCL to support BharatBenz truck drivers who are away from home and solitary on roads for their basic needs, including secured parking, water, fuel, bathing, shelter, etc.
- We have extended warranty periods for our customers whose vehicles were due for service during the lockdown period.
- DICV and its employees have pledged cash donation to various relief funds. We have also donated medical equipment, masks, bio PPE kits and hand sanitizer to multiple government administrations and charities and provided over 1,000 meals a day to stranded drivers and locals around the Oragadam villages in Chennai.
Currently our focus remains on ensuring how safe we can keep our environment and welcome our employees back. It will be a new way of working and we will have to adapt to these challenges. Currently, as a company, DICV has prioritized the welfare of our employees, their families and our stakeholders. We are working diligently towards setting up safety precautions as per WHO guidelines once things start getting back to normal so that no one is exposed to the threat of infection.
Few things are still under consideration such as splitting our workforce into two teams so that we can work on alternate days or with a minimum workforce. This effort, while helping us ensure the teams do not come into contact and risk infection, will also help to maintain social distancing. Volumes will be ramped up depending on market demand once normalcy has been restored.
BS VI Transition
We still need to wait to see the depth and the longevity of this crisis. In many ways, this crisis is pushing us more towards modernisation. This will also be seen in the trucking industry. Indian drivers for the longest times have worked in unsafe conditions. Now ‘safety’ will be a priority and will influence the buying decisions of customers. We have raised the bar of expectation for the Indian customer by providing safer, modern trucks. While we will catch up with the rest of the world with this new emission norm of BS VI, having cowls run in the modern world will be a shame. It is now more than ever that a good scrappage policy will serve as a stimulus to the industry. It will also shape the future of the transportation and logistics industry.
Expectations from Government
Considering the current scenario, most players in the segment must first look internally to understand and realign what needs to be done to restart work as usual. We feel that concessions from the government in terms of repayment of taxes such as GST, TDS, etc. will provide some immediate relief. Again, these will just be stop-gap measures. Concessions must be planned across the entire value chain including manufacturers, dealers, suppliers, etc. in order to jump-start the ecosystem. There will have to be a very carefully planned strategy from our policymakers to revive the segment and move towards recovery.
Outlook: Present and Future
The performance for this and next year will solely depend on when the lockdown eases out and things start going back to normal. It is only post that we would realistically be able to assess the situation. It would be a little premature at this stage to comment on the Indian impact or the effect this is going to have on the entire global economic situation without understanding the scenario in totality.
Medium to Long-Term Impact
For the industry we feel that the entire ecosystem from suppliers, manufacturers and dealers will face a few issues immediately, right from capital crunch to scarcity of components to sharp shifts in plans that will have to be quickly altered to match market scenarios. In the short term, the demand from the market will also be limited. Moving forward, shortage of labour will be another aspect that will bother the system as many migrant labourers will have to find their way back to urban areas and be reemployed.
We also figure that there will be a demand for spares as there has been a stall in production. While stocks may last temporarily, they are bound to run out unless more are manufactured phase-wise. That is why it is important that our policymakers take all aspects of the industry into consideration and carefully provide relief packages so that players in the ecosystem can plan accordingly and help in the recovery of the segment.