Auto stocks tank nearly 9 percent as coronavirus outbreak disrupts supply chains
BSE-listed auto stocks plummeted nearly 9 per cent on Friday as supply chain disruptions due to coronavirus outbreak dented the outlook of the industry, which saw its worst-ever sales decline in two decades recently. BSE auto index fell 3.21 per cent with Tata Motors losing up to 8.93 per cent. Other laggards included Ashok Leyland dropping up to 6.77 per cent, Mahindra and Mahindra 3.18 per cent and Bajaj Auto 2.13 per cent. Maruti Suzuki India was trading with 1.06 per cent losses.
TVS Motor Company, MRF, Hero MotoCorp, Eicher Motors, Apollo Tyres were also trading in red. The domestic auto industry is likely to be negatively impacted and see a disruption in supply chain if the coronavirus epidemic in China and South-East Asia persists longer, rating agency Icra had said last week.
According to the Association of Indian Forging Industry (AIFI), China is one of the leading suppliers of auto components in India, accounting for 27 per cent of the total exports, and the slowing supply of components manufactured there would result in shortage of stocks here. Quoting reports, AIFI said that the impact of the supply disruption will be more profound on passenger vehicles, commercial vehicles and two-wheeler segments. Currently, the original equipment manufacturers have reduced their production plan for February and March due to non-receipt of components, it added.
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