The engines are revving in Sriperumbudur

The spark plugs of the Indian automobile industry may have been ignited. Hyundai Motor India has sold in excess of 12,000 units in a month with the application of smart work processes coupled with lean, agile production teams.

Sriperumbudur is a town panchayat in the Kanchipuram district of Tamil Nadu in India. Located 40km southwest of Chennai on National Highway 4, the first visions that are conjured up of Sriperumbudur (now referred to as Thiruperumbuthur or Thiruperumbudur) are motor races organised by the Madras Motor Sports Club.

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Sriperumbudur is a venue where all Indian petrol heads worth their salt visited, with the passion and fervour that they could muster, to say their novenas at the altar of motor racing. They still do, for the South India Rally and the All India Motor Race Meet, Formula 3 for cars and motorcycles with high octane action being played out on the dirt track for autocross events. In between the action, Sriperumbudur offers the visitor a chance to immerse themselves in a bit of history like the Adikesava Perumal temple, which is the birthplace of Saint Ramanuja, who propagated the Vaishnavism branch of Hinduism; the Vallakotai Murugan temple, more famous for hosting the tallest statue of Lord Murugan in India and the Rajiv Gandhi Memorial. Over the last few decades, however, Sriperumbudur has also become famous for being India′s version of Detroit, the Motor City, playing host to car manufacturers Hyundai and other high-profile automobile units.

Pandemic production measures

The hum of engines and the tinkering of auto parts and machinery were largely silent for the most part of last year in the Hyundai factories, and a better part of 2020, thanks to a slowdown in the automobile sector. Last August, Hyundai Motor India (HMIL), which is India′s second-largest carmaker, had announced that there would actually be ′no production days′ days owing to tough market conditions for the auto sector. They were not the only brand to cease operations. This trend continued for much of 2020 when India came under the grip of the Covid-19 virus which applied the brakes on virtually the entire economy.

The Hyundai manufacturing unit closed shop before the government announced lockdown across the entire country, on 24 March, but it displayed enough resilience to pick itself up and reopen for business on 8 May putting out a modest 200 cars on the first day.

The statement may have been a small one, but it carried sufficient impact for the company to pick itself up and generate a message of hope across the sector. The initial push ensured that Hyundai could jump-start its engines and within a month it has sold in excess of 12,000 units already. The spark plugs that fired up the engine of the automobile industry seems to have been ignited.

Working smart

Hyundai employees are not working hard, but they are working smart in the face of the pandemic to grab the low hanging fruit and ensure that they do not lose their momentum when normalcy is ultimately restored to a highly competitive and cut-throat sector.

Fixes big and small are needed to be made, but the auto think-tank has not lost sight of the bigger picture which is the resuscitation of the industry. Before the lockdown, the Hyundai factory used to employ 13,000-15,000 workers to the production lines, but since its reopening, these numbers have been cut down to agile and adaptable teams of 7,000-7,500 staff with all hands-on deck.

In the ideal world, Hyundai used to operate its units across three shifts - 7am; 3.30pm and 10pm. The smaller labour force focused on one productive shift from 7am-3.30pm. Not once did Hyundai lose sight of maintaining due diligence throughout their production processes and they paid particular attention to employee well-being, health and fitness from the time they left for work till they returned home.

Agility and adaptability

Hyundai is not the only entity which has resumed operations across this region Ford Motor, BMW, Renault and Nissan have also followed suit, in an aggressive display of agility and adaptability, to ensure that they are not left behind.

The wheels are moving again, slowly but surely, and this is demonstrated by a rise in bookings and enquiries to 85 per cent of pre-Covid levels. Maruti Suzuki and Hyundai have seen a surge of around 200,000 units being booked in a month and this indicates a turnaround of sorts.

Many experts are prescribing this to a repressed demand coupled with banks planning to team up with automakers to offer purchase schemes involving teaser-loans tailored toward the industry revving up. It is believed that Maruti Suzuki, Hyundai and Mercedes-Benz have already activated such schemes in a bid to boost sales. A teaser loan typically sees a customer being offered low-interest rates for the first few months, or years, with rates being increased over a period of time.

The need of the hour is for automakers to be innovative in terms of demand forecasts in these disruptive times. The use of historical, or time-tested methods, will not be sufficient because a more flexible approach needs to be applied to every associated element of the sector ranging from production, sales, logistics and supply of auto components.

The signs are all there towards the Indian automobile sector bringing itself back into the reckoning. Barring the havoc in the economy caused by the pandemic India is expected to be the world′s third-largest automotive market by 2026. India holds a strong position in the international heavy vehicles arena as it is the largest tractor manufacturer, second-largest bus manufacturer and third largest heavy trucks manufacturer in the world.

According to Invest India Sale of passenger vehicles had increased by 2.7 per cent two-wheeler by 4.86 per cent and three-wheeler by 10.27 per cent during 2018-19 as against 2017-18. In April-March 2019, overall automobile exports grew by 14.5 per cent. The overall Commercial Vehicles segment registered a growth of 17.6 per cent in April- March 2019. The sector attracted $22.4 bn FDI during April 2000-June 2019; accounting for 5.1 per cent of the total FDI inflows.

The automobile production units based around the regions of Tamil Nadu make quite a powerful impact in the country′s overall fortunes in this sector. It accounts for over 30 per cent of commercial vehicles, more than 20 per cent of passenger vehicles and over 35 per cent of automotive parts in the country. This ensures that Tamil Nadu is placed among the top 10 auto hubs in the world. It is, therefore, only fitting that any resurgence in the industry should emanate from here.