A Fitch Solutions forecast estimated that India’s electric vehicle segment will be hit even harder since a majority of its components come from China.
Image for Representation (Reuters)
Fitch Solutions said it expects vehicle production in India to contract by 8.3 per cent in 2020 as the auto industry faces increasing risk of a supply shortage due to China’s coronavirus outbreak, possibly hitting domestic output if the virus spreads in the country. In China, where the virus originated, automotive manufacturers have halted production in order to limit the congregation of people and reduce the exposure of its population to possible infection and “we see India adopting similar policies if the virus spreads throughout the country,” it said.
Given that India’s health care system is ill-equipped to deal with a large scale epidemic, the rating agency said: “the impact on Indian autos will be much larger because the virus will likely spread much faster in the country when compared to China”. Furthermore, because China is one of India’s largest supplier of automotive components, a slowdown in the supply of China-made components will lead to shortages in India and could force automakers to slow or stop production.