India automaker Maruti Suzuki made 'no sales' since virus lockdown, but chairman believes crisis will pass

If the coronavirus pandemic did not occur, demand for automobiles in India would have steadily grown over the course of the year, according to a top industry leader in the country. 

Though the virus outbreak was first reported in China's Hubei province late last year, the infection has spread rapidly around the world, infecting more than 935,000 and killing over 47,000 people so far, according to data from Johns Hopkins University.

The initial number of cases in India appeared to show that the situation was contained, but as the number of infections grew, it prompted Prime Minister Narendra Modi to announce a 21-day national lockdown that began last Wednesday. 

"The lockdown has meant that all the automakers, including Maruti, have had to close the factories and stop production completely. We've shut down our service stations, our sales outlets, and the dealerships," R.C. Bhargava, chairman of Maruti Suzuki, told CNBC's "Street Signs" on Wednesday. 

"So, no sales have been taking place now for the last about two weeks. Whatever demand there was remains dormant. I'm not sure how quickly it'll come back once the lockdown is lifted," he added. 

In a regulatory filing, publicly-listed Maruti said it sold 76,976 vehicles in India for March this year. That marked a 47.9% decline from the same period in 2019, when it had sold 147,613 vehicles. The filing noted that Maruti suspended its operations in line with the national policy from March 22, two days before the lockdown began. 

according to the health ministry's website, India has 1,649 active cases of COVID-19, the disease caused by the new coronavirus, and 41 people have died while 143 were cured as of April 1, 7:30 p.m. local time.  

Automakers in India have struggled in recent quarters due to economic slowdown and falling consumer demand. Suspension of operations due to the lockdown is expected to further exacerbate the situation the industry is facing.

Bhargava said if the coronavirus pandemic did not happen, demand would've steadily picked up over the course of the year.

"The question now which will come up is that to what extent has the slowing down of the economy, because of the coronavirus and the impact of the coronavirus on the customer's thinking and behavior, going to impact demand once the lockdown is lifted," he said. "I don't have an answer at the moment. I think we'll have to see as we go along what happens."

India's lockdown is set to end on April 14 and factories are expected to resume operations the day after. So far, officials have indicated there are no plans yet on whether the lockdown would be extended. 

Maruti is also pitching in to produce ventilators and other health-care supplies — like masks and personal protective equipment — as part of India's efforts to tackle the outbreak. Working with a start-up called AgVa Healthcare, Maruti would use its factories to scale up production of ventilators to hit a volume of 10,000 units per month. 

Rival automaker Hyundai Motor India said it ordered COVID-19 testing kits from South Korea that they can accurately test over 25,000 people.

Bhargava said Maruti is looking at China and other countries to source for certain imported components needed for the ventilators. Its local vendors are already making some of the other required parts.

He explained that Maruti has prepared its plants to assemble, test, pack and ship ventilators in large volumes, adding that it would continue ventilator production for as long as the government asks, even when vehicle manufacturing resumes.

When asked if Maruti would lay off employees due to the current business environment, Bhargava said: "No, I don't think we'll be cutting down staff. I don't have any serious concerns about our ability to get back to working normally. I don't have any worries about the future because I think like many crises in the past, this crisis will also pass."