Tuesday, 25 October 2011

Thailand floods may hit Indian auto companies




The situation for the Indian Automotive market may aggravate at a time when the Industry is already hi the worst. The Indian Automotive Industry which is already facing the heat of high Interest rates along with ever increasing fuel prices and no clarity from the Government on fuel pricing policy so as to schedule their diesel-petrol mix accordingly.

The situation worsens when the Indian auto industry faces the turmoil of other countries on a global scale. This is exactly what is happening. The Indian auto industry is said to be hit due to floods in the Thailand.

Thailand is a key hub for carmakers, as many countries including India have a mini trade pact (early harvest scheme) signed with them according to which countries including India will source parts and components from Thailand due to cheap availability of resources available over there.

"The ground reality is pretty grim in Thailand and we are studying the situation there. Things will become clearer only by the first week of November," Shekar Viswanathan, deputy MD at Toyota's Indian subsidiary said.

Toyota gets a variety of parts from Thailand, including engines and transmissions. These are used on models like Fortuner and Innova. Toyota India, however, will not be impacted immediately as it has an inventory to cover operations till the middle of November. "We will be able to sustain for some more time." The picture in Thailand is not very comfortable as operations of companies and part makers have been hit badly due to floods. These include not only Tier-I suppliers but Tier-II and Tier-II suppliers, many of whom may take time not only to recover but also to build up required quality levels. 

Other companies like Honda, Ford and Maruti Suzuki have also expressed their concern over the situation in Thailand.

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