China’s prolonged lockdown could impact operations of domestic automakers

Honda Motorcycle & Scooter India President, Managing Director and CEO, Atsushi Ogata, recently told FE that the company is seeing some impact on the production of a few of its models, which use smaller chips imported from China. , as activities were suspended at the Port of Shanghai.

The operations of domestic automakers could be further affected if the lockdown in several cities across China, including Shanghai, to check for Covid-19 infections is prolonged.

The global shortage of semiconductors has already forced original equipment manufacturers (OEMs) to cut production. Supply chain disruptions due to multiple waves of Covid-19 and the recent Russian-Ukrainian war have also not helped the situation.

Honda Motorcycle & Scooter India President, Managing Director and CEO, Atsushi Ogata, recently told FE that the company is seeing some impact on the production of a few of its models, which use smaller chips imported from China. , as activities were suspended at the Port of Shanghai.

“But the impact of the Shanghai lockdown is recent. The major problem is the shortage of chips, not only for Honda Motorcycle & Scooter India, but for all automakers around the world,” Ogata said.

A Tata Motors spokesman said the automotive industry in particular continues to struggle with a global shortage of semiconductors, and while there has been improvement in recent months, this remains uncertain in the near term. .

“We continue to remain nimble and flexible as the situation evolves and apply smart allocation between models to maximize production. We have also developed alternative architecture for affected parts and worked with supplier partners to accelerate action. Going forward, we are working to develop full supply chain visibility across tiers and diversify risk,” the spokesperson added.

Saket Mehra, partner and automotive sector leader, Grant Thornton Bharat, said that with Chinese imports serving India’s automotive, steel and electronics sectors, any lockdown will have a direct impact on these sectors.

Notably, imports of automotive components into the Indian market increased 71% to $8.7 billion in the first half of FY22 from $5 billion in the first half of FY21. represents more than 26% of these imports, in particular electronic and metal components. About $9 billion of electronic components (across all sectors) are imported from China, which will also have an impact if the lockdown continues for an extended period,” Mehra said.

Suraj Ghosh, head of S&P Global, told FE that if lockdown restrictions persist and normal production does not start in the coming weeks, India’s auto industry is likely to face production issues as several components and sub – electronic components are sourced from China.

“There could be a double impact. Not only could there be a risk of shortages of certain electronic and other components, but the availability of vessels could become an issue, driving up freight costs,” Ghosh noted.

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