Marriage Halls, College Hostels, Hotels, Resorts around Chennai are experiencing a new demand in the last few days
In case you are wondering why are we covering news about the hospitality industry, well, there is a reason. The new-found demand has been created majorly by automotive companies which are based around Chennai.
Chennai, which is also known as the Detroit of India, houses multiple plants of OEMs and automotive component manufacturers. To name a few, Hyundai, Renault Nissan, BMW, Ashok Leyland, TVS Motor, Royal Enfield, Daimler, Apollo Tyres, etc. have their manufacturing facilities in and around Chennai.
Chennai has been impacted severely due to the Covid-19 outbreak. The city has also been witnessing a stricter lockdown to further curb the spread of the virus. Automotive companies have had a dry spell since mid of March which lasted till end of April. During May and June too, overall production was slow.
However, with the reopening of the economy, most OEMs are witnessing improved sales. While the sales figures are nowhere close to the pre-Covid era, the demand seems to be rising slowly, with the rural economy doing better than urban centres.
These OEMs and component manufacturers don’t want to loose out on sales due to production related constraints. Hence, most OEMs have started to take large resorts, hotels, college hostels, guest houses on extended period of rent to house their production staff. Companies are trying to keep their workforce close to the plant in a bid to curtail their contact with the outside world and hence reduce risks of Covid-19 infections.
Hyundai Motor India has entered into a contract through which they have housed around 1,200 workers in various college hostels. They have arranged for similar setups for staffs of their vendors too. While production is still low, Hyundai intends to ramp it up, thanks to the sustained demand it has been witnessing over the last few weeks. TVS Motor has tied up with some hotels for similar facilities while Renault-Nissan have arranged similar facilities for their staff members at certain hotels.
Overall, plants in and around Chennai can produce around 6 million vehicles annually. This accounts for around 1/6th of the total installed capacity of the country. With social distancing becoming the new normal, considerable number of commuters are moving away from public transport.
Hence, all auto companies see a considerable opportunity to service the needs of Indian customers. This is the reason why OEMs are leaving no stone unturned to ensure uninterrupted production. We believe that while this strategy might work well for the short term, it will also lead to additional costs for the companies and might not be feasible in the longer run.