Tata Motors to cut output due to COVID second wave

Tata Motors, which has been setting new records for auto sales in recent months, said it has decided to “calibrate” production of its vehicles with actual demand to prevent oversupply and a pile up of inventory at the company and dealers.

“The lock-down enforced in various parts of the country is expected to impact vehicle demand temporarily,” Tata Motors said today. “Hence, the company has set in motion a comprehensive ‘Business Agility Plan’ to protect and serve the interests of its customers, dealers and suppliers.

“By carefully calibrating and matching supplies with retail demand, Tata Motors shall ensure that optimal levels of inventory are maintained with dealers to meet whatever customer demands arise and also be prepared for a rebound in demand once the situation returns to normalcy,” it added.

A year ago, auto makers were forced to cut down production due to the imposition of curbs on the operations of large factories.

This time, however, most of the industrial areas are outside COVID-19 hotspots and the companies can, technically, continue to operate the plants as before.

However, there has been a huge spike in the proliferation of COVID-19 cases across the country due to the emergence of more contagious variants of the virus this year. Some of the bigger cities have seen major disruptions and been forced to go in for localized shut-downs.

Most companies have put in stricter measures to ensure that their employees do not transmit the virus to each other at their workplaces.

Tata Motors too said it has “scaled up efforts to enhance the well being of its personnel” and its partners.

“Keeping employee safety foremost, standard operating procedures have been updated for the prevailing second wave with the focus on expediting vaccinations, providing support to affected employees and their family members,” it said.

Tata Motors also said it will try to put in plans to meet the requirement of raw materials for its plants.

Last year, several auto makers had to go slow on their production due to the paucity of raw materials — particularly auto parts — as their supply was disrupted by lock-downs and disruptions at the manufacturing facilities operated by their vendors.

The auto industry continues to grapple with a shortage of semiconductor chips after much of the capacity was diverted to other industries during the first wave of COVID-19.

Tata Motors said it will “review and plan for the critical raw materials to cater to this volatile demand outlook and work closely with our vendor partners to meet the same.”

“Tata Motors believes this approach best serves the interests of all stakeholders by utilising the cash invested in the entire ecosystem in the most optimal manner,” it added.

The company did not give any more details about the quantum of reduction likely in production.

Tata Motors has had a dream run for the last 3-4 months, setting several records in its passenger vehicle division, as demand for its cars and SUVs hit record levels after several years of lackluster performance.

Meanwhile, the largest two-wheeler maker in India, Hero MotoCorp, said it plans to vaccinate its entire workforce.

The government has allowed companies to vaccinate anyone above 18 years of age, and to procure vaccines directly from manufacturers.