The impact on supply chains across China has prompted the company to look for alternative sources and is even looking at the option of transporting parts by air freight to ensure smooth running of assembly lines.
The company has new products in its line-up and is also significantly upgrading existing models to meet BS-VI norms. The production ramp-up in these cases is a gradual process, which requires substantial retooling at its plants and establishing inventories of new components. Any shortage of supplies could hamper this process.
“Some of the components — they can be small and they don’t need to be high in value; but these small ones can possibly cause the trouble,” Tata Motors MD Guenter Butschek told ET, adding that even if the company itself may not have a shortage of parts coming from China, some of its suppliers might.
The company in its official sales release on March 1 confirmed that supplies have been hit and it had resulted in lower volumes in February.
The carmaker may start facing some minor shortages by the middle of this month, as per Butschek. It is already looking for alternative sources for these components and adjusting its production plan to best mitigate any possible impact.
“Not what you would normally do during the (production) ramp-up,” Butschek said.
During the period April 2019 to January 2020, Tata Motors’ passenger vehicle division has registered a much steeper decline of 37 per cent to 1.2 lakh units, with its market share dropping to 5 per cent from 7 per cent in the yearago period. The ecline was also on account of shifting towards retail from wholesale markets.
Tata Motors was aiming to outperform in FY21 riding on a facelifted Tiago, Tigor, Nexon and the new Altroz. That aim can be achieved only if supply chains return to normalcy.
It normally takes up to 90 days to replenish the inventories by sea freight and the company might have to consider airlifting critical components to expedite the process, Butschek said.
The glimmer of hope is that an increasing number of suppliers from China are resuming manufacturing and many have started shipping the inventory produced before the Chinese New Year break, he said. No supply has resumed from Wuhan though — the epicentre of the Covid-19 outbreak.
