Volvo Cars will reopen its Torslanda factory and offices in Sweden next week after overhauling its production processes to help prevent coronavirus infections, following a three week shutdown caused by the pandemic, the carmaker said on Friday.
Volvo’s factory in Ghent, Belgium, will reopen on 20 April, but at reduced production output and the carmaker plans to reopen its South Carolina plant in the United States on Monday 11 May after adapting sanitation and cleaning routines.
Swedish carmaker, which is owned by China’s Geely, has a good order intake, but three weeks’ worth of production has been lost, Samuelsson said.
Because the European economy has ground to a halt, Volvo will continue to make use of shortened working hours, Samuelsson added.The engine plant in Skoevde, Sweden, and the body component manufacturing site in Olofstroem, Sweden will continue to plan their production on a weekly basis and adapt according to needs in the other plants, Volvo said.
The domestic passenger vehicle (PV) industry’s performance in FY2021 severely affect due to Covid-19 impact on Indian economy. As per ICRA’s Research Report, the lockdown financial stress on consumer’s income level result in deferral of non-discretionary items like PVs.
Whereas with rural parameters show signs of healthy growth thus may bring cut loss to the industry.
Recovery in rural income and improvement in overall economic activity will remain crucial to have any meaningful improvement in retail demand off-take. Given the nationwide lockdown and consequent fallout on economic activity, the ratings agency has already revised India’s GDP growth estimate to ±1%.
Ashish Modani, Vice President, Co-Head, Corporate Ratings, ICRA Limited says, “The domestic passenger vehicle (PV) industry is witnessing a demand slowdown for the last 4-6 quarters due to factors like economic slowdown, tighter financing environment and inventory de-stocking at dealerships; this has affected wholesale despatches. As a result, industry wholesale volumes declined by 17.9% during FY2020
The wholesale dispatches declined by steep 17.9%, though the pace of contraction has moderated substantially from H1FY2020 level.
Nationwide lockdown has resulted in sharp decline in despatches during Mar-2020, thereby pulling down full year growth rate. The primary reason for decline in car sales include 1) tighter financing for consumer as well as dealerships, 2) slowdown in economy which impact consumer sentiments, 3) weak farm income and 4) deferral in car purchase decision in anticipation of large discounts (ahead of BS VI or GST revision). The share of diesel vehicle in overall domestic PV sales fell below 30% level during FY2020.
Economic slowdown and covid-19 lockdown will increase delinquencies by 50-100 in the near-term (next 1-2 quarters) though; it will still be at comfortable level as compared to other automobile asset class like 2W, CV or tractors. Currently, delinquencies vary across financiers, with NBFCs having much higher delinquencies as compared to public sector banks (PSB) and private banks (PVB). While RBI has announced some relaxation in loan repayment obligation post the outbreak, the shock on consumers’ income / investment profile will result in weakening of vehicle asset class. Amongst all borrower segment, taxi segment and self-employed will be adversely impacted due to lockdown impact.
ICRA has a Negative outlook on the PV sector given the adverse impact; and the credit profile of industry participants – automotive suppliers, PV OEMs as well as dealerships will weaken further in the near term. Retail demand will be weak over the next two quarters and the recovery is likely to be slow and gradual. This implies players’ profitability will continue to witness pressure over the next two quarters.
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