Medium, heavy commercial vehice segment could halve this year, says Daimler India

These projections mean that the automobile market, especially the commercial vehicle space, is on a long road to recovery. The ongoing health crisis has dampened demand, especially with the added uncertainty over how long the various restrictions will last. Several automobile majors reported near-zero sales for April, and depressed sales numbers in May.

“We don’t expect normalcy to return until the end of next year, and till that happens, we can’t expect anything positive from the economy,” said Arya.

While the pandemic has forced several companies, automakers included, to fire staff and cut salaries, DICV has not played that card just yet.

"We have not carried out any layoffs up until date, and have paid full salaries to all our employees,” said Arya, “We have also ensured that contractual employees are fully paid, and will have to watch how demand is like in the next few quarters before reacting to the situation.”

For now, DICV has kept its fixed costs lean, and says it has “acted aggressively” on variable costs with suppliers. “We have decided not to jeopardize or postpone any investments in our products,” said Arya, “We believe that sooner or later, when the pandemic ends, we shouldn’t have taken any decision that would harm us in the medium to long term.”

In March, all automobile majors shut their plants to prevent the spread of the coronavirus. Re-opening is currently underway and most automobile majors are now operating their factories at reduced capacity. Daimler has chosen to deploy a mere 30 percent of its workforce despite Tamil Nadu’s regulations allowing for 50 percent deployment through May 2020.

“We have permission to get 50 percent workforce but have decided to keep it at 30 percent for now,” said Arya, adding that the company would take a call on ramping up to 50 percent later this month.

CNBC-TV18 was allowed exclusive access to Daimler’s India plant, located at the Oragadam Automotive Corridor, near Chennai. The new normal in post-COVID manufacturing has forced the German automaker to make some changes to manufacturing on the shop floor.

“We have to ensure that our employees maintain adequate distance between themselves, and not exchange parts or tools so as to avoid contact,” said Arya, detailing the company’s social distancing measures on the shop floor. “We have had to ensure that employees wear face shields where physical distancing is not possible and have changed the layout in some areas of our factory floor so as to provide more distance to our workforce,” he added.

While the company’s plant capacity has remained unchanged at a little more than 72,000 units, the company has adjusted production in line with current demand. The German automaker has put a total of 100,000 trucks on Indian roads, and has exported 30,000 units. It began production at Oragadam, in 2012.

Automobile exports have been hit in the face of the COVID-19 pandemic, and Daimler is no exception. “Exports from DICV are affected, and we can expect to see a slowdown,” said Arya, “We export to 50 markets, and all countries are in various stages of the pandemic.”

However, the company has little option but to continue focusing on this component of its India business. After all, even in the face of sluggish domestic demand in 2019, the company exported 8,000 units in 2019 versus 7,000 units the previous year. “There is plenty of headroom for Indian automobile exports to grow,” said Arya, “We are focusing here to keep committing to our volumes.”