How The Auto Sector Is Preparing Itself Against The Third Wave

Manav Kapur Aug 05, 2021

The health ministry has said that the third wave of Covid-19 is now imminent and India should start to prepare itself for the new mutant of novel Coronavirus. The outbreak of the pandemic and consequent lockdowns have had a devastating impact on India’s automotive sector. The second wave of COVID-19 has only added to its woes, taking a heavy toll on it, not just economically but emotionally as well.

With different pandemic waves coming and going, the auto sector has started behaving in a similar manner in terms of its peaks and troughs. There will be a rise and fall in demand and fluctuation in supply as well. Moving along, many industry mavens from various sectors unanimously think that India has learned many lessons from the pandemic, and it can certainly handle the challenges if the third wave arrives shortly.

Strict adherence to the Covid-19 guidelines, employee and partner safety protocols, stringent social distancing, regular sanitization, and vaccination can help in averting the onset of another wave to a great extent. Some steps adopted by the manufactures can be broadly summed up in the following points.

Buffer Stock

With the current pandemic still ongoing, the manufacturers have started keeping buffer stock at every level. Mostly auto and pharma industries are maintaining enough supplies to keep operations running smoothly even during unprecedented times. Buffering raw materials can stabilize the fluctuation in demand and supply.

Less Import Dependence

While the dependency of the auto manufacturing sector on import is approximately 70 percent but some companies are supporting 75-95 percent localization and focusing less on import. In the wake of the global pandemic, many nations had come to a standstill, with negligible business operations which in turn encouraged manufacturers to look for more indigenous associates, partners in the domestic market.

More Focus on Localization

The supply chain management got badly affected during the pandemic. To improve the customer experience and meet the ongoing demand, there is a dire need to adapt the government’s hundred percent localization movement and start to cut dependency on imports.

Hiring Local Manpower

We have observed that the pandemic has worsened the condition of migrant workers in India. Whenever there were any new announcements made by the government, the migrant workers lined up at railway stations and bus stops to head home. This affected the production adversely in many manufacturing units. There are innovative ways to retain manpower. And in some cases, companies have started looking for laborers who are not migrant but local, also at times offering better facilities so that the toll on the laborers is minimized.

Strong Secondary Mapping

The auto sector can offset the impact of the upcoming third wave by strongly mapping the Tier2 and Tier3 suppliers. There is a need to monitor the position and stock level, evaluate the manpower situation. The auto sector will have to make consistent endeavors to meet the supply as per the demand generated even if the times have been challenging. However, more than preparing for the third wave, we should all work towards preventing the onset of a third wave and follow strict Covid-19 protocols. Else the unprecedented economic downturn of 2020 will raise its head again, with all the challenges the economy faced in the past year which led to massive losses of revenue and livelihoods.