An analysis of automobile industry slowdown and means to cut down on operational costs in the given scenario

by admin | Aug 23, 2019 | Asset Management, Blog

An analysis of automobile industry slowdown and means to cut down on operational costs in the given scenario

Automobile industry in India

Automobile industry in India is a large scale industry contributing nearly 12 percent to the GDP of the nation. It is the fourth largest in the world attracting the attention of automobile manufacturers worldwide. Hence it is no wonder that the current fallout of imposition of Union Government regulations on this industry is a hot news and hits the headlines.

Slowdown in sales of vehicles

In the post GST era, the Government has removed the hurdles at border check facilitating the increased movement of trucks across territories between 30-40 %. Encouraging the movement, Government has increased the allowable tonnage load by 25%. These reasons are also attributed for the slowdown in sales of commercial vehicles such as trucks.

Cost Reduction in Automobile Industry

Taking cognizance of the recent statistics that the passenger vehicle segment has witnessed a steep decline of 31% in sales against the previous year figures with the overall automobile sale figures falling off by 17%, vehicle manufacturers need to look out for other avenues to optimize profits. Hence it is the opportune moment to lay focus on cost reduction in automobile industry by maintenance management to maximize profits in the current scenario.

It would take time for automobile industry to recover from the headwinds owing to the reasons given below:

BS4 vs BS6

Regulation change mandates migration from BS4 to BS6 with effect from 1st April 2020. Even if the Registration Certificate(RC) & Fitness certificate(FC) authorize the use of the vehicle beyond 15 years from the month & year of manufacture, the new compliance regulation shows off a red signal if the vehicle happens to be just BS 4 compliant.

BS stands for Bharat Stage Emission Standards which is comparable with EURO standards which are accepted worldwide. We’ve migrated from BS3 to BS4 earlier. The underlying reason is to preserve the air from pollution by automobile exhaust smoke. The present air is polluted to such an extent that it calls for direct migration to BS6 skipping BS5.

Health effects of vehicle emissions

The standards apply to both vehicles and fuel. In spite of the ever-increasing varieties or models of vehicles on the road, studies reveal ten to thirty percent of vehicles contribute to the majority of vehicular air pollution. The diesel vehicles in the market release huge amounts of sulphur as large as 50PPM(Parts per million). Upon switching to BS IV vehicles, the exhausts smoke will contain only 10PPM of sulphur. Hence current inconveniences faced by the industry may be viewed as a marked transformation in the industry, taking into account the health of the future generations, at large.

Exposure to sulphur dioxide from diesel engines causes contraction of nasal air passages leading to lungs inducing sneezing & asthma in infants and young children, whose tender lungs become overloaded than the lungs of adults. A mild exposure to carbon monoxide present in the exhaust of petrol engines is sufficient to cause a tendency to collapse & fall down, vomiting sensation, headaches etc. Continued over exposure to the odourless gas(CO) had been reported to bring about death. Nitrous oxides-another harmful group of ingredients which is enormous in diesel engine exhaust pose grave danger when they chemically react with Hydrocarbons(output of fuel combustion in petrol engines) in the presence of sunlight to form ozones. Ozone may serve useful purpose when present in upper atmosphere but not close to earth. It, rather, is detrimental to the respiratory system and has the potential to cause chest pain.

BS6 deadline

The Government has also been strict in fixing a deadline(Apr 1st 2020) for the sale of already manufactured BS4 compliant units. Consequently few automobiles have even closed some of their production units. Automobile customers are also apprehensive on purchase of any new BS4 vehicle at this stage arising out of fear of severe penalty & decline in resale value of vehicle post April 2020. Government and private sector banks can promote the cause of sale of BS6 vehicles by providing affordable interest rates for vehicle loans. It is notable that Government has eased the norms for PSBs lending to NBFCs which will help.

Having said so, the paradigm shift from the BS IV to BS VI will challenge cost reduction in automobile companies and the oil refineries( as stated earlier the standard applies to fuel as well). Generally it will not involve modifications to the engine itself and would just require some inclusions or modifications to the current exhaust treatment units. There is spike in insurance cost from 1 to 3 years at time of buying. Some states have heaped additional burden on consumers by raising Registration charges. This will obviously incur additional expenditure for the production units and customers too. But it’s in the interest of our health and the generations to come, isn’t it? So lets cooperate with the Government to foster a pollution free environment.

CMMS for Automotive

A CMMS or facility management software comes handy in such situations where automobile units can reduce asset/facility maintenance costs substantially as it saves reactive maintenance labour costs. Our maintenance management software product, namely Innomaint goes far from the usual definition and scope of a CMMS enhancing asset reliability and cost efficiency. Get rid of paper work or excel sheets which is tedious to manage.

Geolocation Tracking & Predictive Maintenance

Innomaint powers you with the ability to schedule tasks, define auto escalation conditions, schedule preventive and condition based predictive maintenance which allow digitized monitoring of vibration, temperature,noise, lubricants, wear, pressure, corrosion and flow for each of your assets. Gone are the days where technicians need to be bound to their worksites ― they can now work on the go with geo location tracking using mobile devices in the field.

Other advantages of CMMS

By complete automation, safe and instant access of documents to relevant users is possible which eliminates work lag at various stages. These benefits free up significant time for you which can be devoted to core business activities. These value additions to the business make Innomaint an ideal choice for the business of automobile customers too.

To conclude, let’s keep our fingers crossed resting our hopes on industrial capabilities (which is amongst the finest in the world) and believe it will fight back and regain the vigour of yesteryear.