Pain from sluggish auto
demand continues in Chakan
Recovery likely by mid 2020; export orders bail out some
Lalatendu Mishra
Chakan
Notwithstanding the recent
measures to stimulate the
economy and provide li-
quidity to the system, the au-
to hub of Chakan and Pune
in Maharashtra are still reel-
ing under the impact of slow
off take of automobiles in
the market.
Auto companies and com-
ponent manufacturers said
that the festive season may
clear some unsold inventory
before BS VI emission norms
kick in. There is a feeling
that things would be normal
by mid 2020. Till then, the
hope is that focus on R&D
would rise and cost cutting
would spur agility.
Despite all the bad news
around the sector, compa-
nies that have focussed on
exports and bagged new cus-
tomers have managed to off-
set poor domestic sales.
Stating that sales have
been under pressure for the
past few months, Mercedes-
Benz India MD and CEO Mar-
tin Schwenk said “We adjust-
ed our production many
months in advance when we
saw we might run into some
issues. Now we are confident
with the reduced plans.”
“On the dealer side, li-
quidity was a bigger pro-
blem. We supported them
through our Daimler Finan-
cial Services where we
could. We reduced dealers’
stocks. The problem has not
gone [away] yet,” he added.
He said that in September,
the company saw 25% high-
er traffic and enquiries at
showrooms compared to a
slump month such as Au-
gust. “We may not be able to
meet the 2018 numbers. Our
Q3 will be below the Q3 of
last year. We expect better
sales in the festive season,”
he said.
While most component
makers have been impacted
severely, Flash Electronics
(India) Pvt. Ltd., which sup-
plies electric and electronic
Mercedes-Benz India’s Martin Schwenk said in September,
the firm saw 25% higher traffic at showrooms. VIVEK BENDRE
components and gear boxes
to two-wheeler and four-
wheeler companies, said it
remained insulated due to
its product expansion and
export strategy.
‘Not hit by slowdown’
“We are not affected by the
slowdown. Even this year,
we have grown. This is not a
slowdown but a correction.
This correction happens ev-
ery 6-7 years. This year, it
has been a little more signif-
icant for reasons that are not
exactly known,” said San-
jeev Vasdev, MD, Flash
Electronics.
Adding that market senti-
ment was still weak, he said
as leading OEMs have been
saddled with high stock, Oc-
tober production plans were
pretty subdued or more si-
milar to August or Septem-
ber of this year.
“The situation is not going
to return to normal soon. It
will take about 8 to 10
months before things can
really become normal. The
customers need more clarity
on electric vehicles and BS
VI before making any pur-
chases,” Mr. Vasdev said.
He said it was possible for
the company to remain insu-
lated as it had acquired new
customers and had set up
two manufacturing units for
forgings and gears which are
*
now producing at full steam.
“Pitched against my busi-
ness plan, [my numbers may
be] down but year-on-year, I
will grow in revenue.”
Auto component firms
like Kinetic Engineering Ltd.
have also managed to offset
domestic losses through in-
creased export income.
“The last two quarters have
seen significant slowdown,”
said Chaitanya Koranne,
CEO, Kinetic Engineering.
“We have been lucky that
one of our customers, Re-
nault, has launched a new
vehicle and they have
propped up the volume a lit-
tle,” he said. He said it would
take about two quarters
more for normal to return.
“Since 50-60% of our re-
venue come from exports,
we will be at the same level
as last year,” he added.
Viraj Kalyani, founder
and CEO, Kalyani Studio,
which develops high tech
productivity enhancement
equipment for OEMs, said
he had seen a lot of interest
from OEMs for his products
in the last six months.
“There has not been a ta-
pering of interest or demand
from customers. In challeng-
ing times, OEMs look at im-
proving efficiency. They are
more invested in improving
their products to be globally
competitive,” he said.