One of the leading automotive component suppliers, Bosch Limited has yet again announced that the company will observe no production days ranging upto 10 days per month per plant belonging to its powertrain solutions division during Q3FY2020. The decision was taken in order to align production with sales requirements, the company said in a stock exchange filing on 4 October 2019.
Earlier, in a filing on 14 August, Bosch Ltd had announced a similar shutdown per month per plant belonging to the powertrain solutions division during Q2FY20 citing the same reason.
Struggling to contain its production of critical components, largely engine parts, to avoid inventory build up during the unprecedented auto slowdown, the Bangalore-based company began suspending operations in a series from July when it had first shutdown its Gangaikondan plant in Tamil Nadu for five days starting 23 July and its Naganathapura unit in Karnataka for two days (27 and 29 July) followed by single-day shutdowns at Jaipur (27 July) and Bidadi (29 July) units.
In his speech during the 67th annual general meeting on 23 August, V K Viswanathan, chairman and non-executive director at Bosch Ltd, who resigned from the post the same day, said, “The automotive sector is expected to show muted growth at best, if not negative for the financial year 2019-20.” He was referring to the demand slump rising out of increased total cost vehicle ownership (TCO) due to safety and emission norm changes, increase in the third party insurance among other factors.
“In the near term, the downtrend in the automotive market with high inventory build-up in the pipeline is a definitive threat,” he had said highlighting that due to the existence of inventory in the pipeline, the pre-buy effect is likely to be insignificant. Automakers expect pre-buy of BSIV compliant vehicles to kick in during Q3-Q4 FY20 owing to significant price hikes in the BSVI vehicles mandated to be sold from 1 April 2020.
It can be recalled that Bosch had merged its two key engine parts divisions namely Diesels System and Gasoline System into one consolidated Powertrain Systems in early 2018. Although the company had not clarified key reasons behind the step, sources aware of the matter had told Mint that Bosch had merged both divisions ahead in time to brace up for Maruti Suzuki’s strategic plan of vacating 1-1.5 liter diesel car segment under incoming BSVI emission norms.
“Maruti Suzuki had informed its key suppliers including Bosch much ahead in time before publicly announcing about its plan to vacate the diesel car segment under BSVI norms. This was a big blow for Bosch as it supplies common rail systems to Maruti’s diesel cars,” a source at Bosch had told Mint in the recent past.