The second wave of COVID-19 has put the brakes on a rebound in India’s commercial vehicle market, reports Aditya Kondejkar, Power Systems Research Analyst for South Asia Operations, in the May 2021 issue of Motorindia magazine.

Kondejkar notes that the second wave of the pandemic has caused shortages of semiconductors and steel as well as weaker consumer demand. These forces have pushed commercial vehicle production down nearly 60% month-on-month (MoM) in April.

Kondejkar points out that the India CV market witnessed a strong performance in 2018 with more than 1.13 million
units produced, owing in large part to GST implementation and replacement demand. In 2019, however, the Indian CV market began shrinking as it faced headwinds from revised axle load norms, vehicle over-capacity, BS-VI transition, and a liquidity crunch.

The market decline continued to a historically low production volume of 0.5 million units in 2020 as the CORONA pandemic spread. Although the Indian economy managed to recover after the first wave, from April 2020 through today the medium and heavy commercial vehicle (MHCV) segment has been the hardest hit of all vehicle categories.

In Q3 2021, the government’s aggressive investment in infrastructure and construction activities helped boost the struggling MHCV segment. However, when the CV industry was about to accelerate, the second wave of CORONA-19 hit. Read Kondejkar’s analysis here. PSR

The largest growth has been in the output of plows, climbing to 1,800 units and AG tractors – by 43% to 2,800 units. Production of sprayers has increased by 37.3% to 953 units. There has been a modest gain in production of grain combines, increasing 10.2% to 3,800 units, and self-propelled mowers, gaining 2.6% to 228 units.

The domestic media has published information that experts have reduced the forecast about grain harvest. However, vice-president of the Russian Grain Union Korbut says there are no such threats.

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PSR Analysis: Among the reasons of such growth are the recovery from the pandemic, high prices for grain, expected future price growth for machines based on metal price growth and possible depletion of the money, assigned by the State to subsidize purchase of local AG machines. If this fund is depleted, the prices for machines will go up by 25% at once. From the other side, the sales growth is restricted by the deficit of some machines, like combines and sprayers. In this case, the production cannot catch growing demand.   PSR

Maxim Sakov is Market Consultant – Russia Operations, for Power Systems Research

In Southeast Asia, where the delta variant of the COVID-19 is spreading rapidly, business activities are becoming stagnant. In response to government regulations and the rapid increase in the number of infected people, major Japanese companies such as Toyota and Panasonic have suspended production at some of their plants. In addition to the decline in local sales, the disruption of the supply chain has also affected production in Japan.

Toyota has sequentially shut down all three of its plants in Thailand since July 20. The company has not yet decided when to resume operations because it has been unable to procure parts due to an outbreak of infection at one of its customers’ plants. Honda also shut down one of its plants in Thailand from August 3 to 5.

Since June, countries in Southeast Asia have tightened restrictions on activities in response to the COVID-19.

Thailand has extended the deadline for sealing off Bangkok and other cities until the end of August. Factories will be allowed to operate but will be ordered to close temporarily in the event of a mass infection. Malaysia continues to impose strict restrictions on economic activities in Kuala Lumpur and other cities, setting limits on the types of businesses that can operate and the number of people who can come to work.

Indonesia’s medical system is under pressure due to the rapid increase in the number of infected people, and there is a growing trend to send expatriates and their families home. Toshiba is allowing expatriates and business travelers to work from home and return to their home countries if they wish to do so. In Vietnam, a curfew in Hanoi and Ho Chi Minh City has hampered logistics and other operations. The Philippines will tighten restrictions on movement and activities in the Manila metropolitan area from April 6, introducing the strictest of the four measures.

Parts produced in Southeast Asia are also exported to Japan, and the impact on domestic production activities has been spreading. Japanese companies have been shifting their production to Southeast Asia. The Association of Southeast Asian Nations (ASEAN) accounted for about 16% of Japan’s total imports in 20 years.

Toyota has decided to temporarily shut down its three plants in Aichi Prefecture due to the stagnant supply of parts from Vietnam. Honda is also planning to suspend its Suzuka Plant for seven days in August due to stagnant parts supply from Indonesia.

Source: The Nikkei

PSR Analysis: Southeast Asia, which has been able to contain the infection better than Europe and the United States, is now being affected by the onslaught of the delta variant. Many foreign companies, not only Japanese but also Chinese, South Korean, and US companies, are operating in Southeast Asian countries, but many of them are being forced to limit their actions in the region. I have heard that security is worsening in some areas, such as the coup d’etat in Myanmar and the demonstrations against the current government in Thailand. In the automotive industry in particular, there is another problem, the shortage of semiconductors, and a combination of factors is slowing down production.

The biggest problem is that it is impossible to predict how long it will take for this to subside. The supply chain will inevitably be affected, with Toyota already temporarily shutting down three of its plants in Japan due to stalled parts supplies from Vietnam, and Honda shutting down its Suzuka plant in Japan due to stalled parts supplies from Indonesia. The spread of COVID-19 infection in Southeast Asia is not only a problem in Southeast Asia. BCP will become even more important in the future. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

Since 2020 Komatsu has been investing in Parauapebas, in the state of Pará in Northern Brazil, for a new facility that will provide maintenance for equipment and produce new equipment. The General Manager of the Mining Division for South America, Charles Medeiros says the unit will produce products for all regions in Brazil and for export.

Source: Automotive Business     Read The Article

PSR Analysis: Pará is an important region for mining where companies like Vale are located and demand for local support, especially for maintenance and spare parts availability, is significant. The total investment announced is less than US$ 8 million and it is small investment for high volume production. It’s most likely that the plant will only assemble CKD units for mining operations in that region.  PSR

Fabio Ferraresi is Director Business Development South America, for Power Systems Research

“COVID-19 cases started spreading in the rural areas with the beginning of the month of May, and agriculture activity in the month of May is bare minimal, particularly land-based activities,” says Niti Aayog Member (Agriculture) Ramesh Chand.

Read The Article

PSR Analysis: The second wave of COVID-19 started spreading in the rural areas in May 2021, but agriculture activities in May are minimal, and are mainly land-based activities. Agri activities peak in March or the middle of April, after which it drops significantly and again peaks with the arrival of monsoon.

COVID cases surged from the second week of April until the third week of May. So, even if there is less availability of labor in May till mid-June, it won’t hamper the agri activities. Reverse migration will likely follow the same trend followed last year. The labor force is moving to rural areas as there has been a large increase in COVID-19 cases in urban areas, and these laborers are willing to work in the agriculture sector for livelihood. Hence, the large segment of rural income, remains intact and rural demand on that count will not be affected.

Post-first-wave, agriculture activities propelled the overall economy and drove the automotive sector. Historically it is evident that good Agri income leads to the healthy production of two-wheelers. Furthermore, in the past few years, we have seen an increased penetration of passenger vehicles in rural areas. So the segment of the on-road vehicle is likely to benefit to some extent.   PSR

Aditya Kondejkar is Research Analyst–South Asia Operations for Power Systems Research

MOSCOW–The recently-completed Neftegaz (the International Exhibition for Equipment and Technologies for Oil and Gas Industries) trade show held at the Moscow Expocenter was smaller than in the past. This fair is conducted every two years and is a largest local event in the oil and gas industry. This year’s fair was held April 26-29.

It’s a small trade show, and it was even this year than in past years. The number of participants was down from 550 to about 400 companies representing 18 countries. The largest delegations (besides Russia itself) were presented by Germany and China. Germany has set national expositions on the fair.

Large international companies, specializing in power machines, were not represented at the show this year. Companies such as MTU, MWM, Waukesha, and Caterpillar did not participate this year. Probably the reason was the COVID-19 pandemic, which affected the oil market.

Power machines were shown by Belorussian Fidmash and some Russian companies. Surprisingly, gen-sets were not presented at the fair this year at all. Reciprocating engines were shown by single company – Baudouin, a joint venture between KAMAZ and Weichai. The company assembles diesel and NG engines up to 2.7 MWt in Yaroslavl.

The components come from China and are used in local production. The main application for these engines is power generation, however, they are used in other segments too. They started to supply Belaz mining trucks, and projects for railway and marine applications are under development, too. During the last year, the company has assembled more than 100 engines, and the plan for this year is to exceed 200 units.

Last year’s oil crisis, related to the pandemic, has affected the industry. But the recovery has begun. It’s expected that the oil deficit will drive price growth. Goldman Sachs sees “commodities rallying another 13.5% over the next six months, with oil reaching US$80/bbl.” If this forecast turns out to be accurate, the industry will enjoy a substantial cash flow increase. PSR

Maxim Sakov is the Russian Market Consultant for Power Systems Research.

Despite the COVID pandemic, in 2020 KAMAZ secured positions in the market and has claimed the status of leading Russian heavy vehicles supplier. The company claims a leader position in the 14+ ton truck market in Russia with a share of 47.5%, up 3.3% over 2019.

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PSR Analysis: Of course, State support measures are a big part of this success. Still, domestic truck and bus production has demonstrated good survival potential even in a major pandemic. PSR

Maxim Sakov is Market Consultant – Russia Operations, for Power Systems Research

The presentation included the latest information on COVID-19 impacts on construction equipment production. JCB Power Systems provided details regarding emissions in developing engine technologies that are coming to market across the globe.

On Monday, Nov. 30, 2020, at 9:00 am CST, representatives of two leading international firms will present a free one-hour webinar discussing the construction outlook in Europe and North and South America.

During the session, Power Systems Research and JCB Power Systems will present the latest information on the impact of COVID-19 on construction equipment production. JCB will provide details on emissions in developing engine technologies that are coming to market across the globe.

During the webinar, the presenters will discuss

During the session, we’ll present the latest information on COVID-19 impacts on construction equipment production. JCB will provide emissions details in developing engine technologies that are coming to market across the globe.

The webinar will be held Monday, Nov. 30, 2020, 9:00am – 10:00am CST.

Space is limited, so please register as soon as possible using the REGISTER NOW button. 

The scheduled presenters include

• Emiliano Marzoli – Manager-European Operations, Power Systems Research
• Daniel Jackson – OEM Engine Sales/Applications Manager, JCB Power Systems
• Christopher Bamforth – European Market Analyst, Power Systems Research
• Lorena Violante – Senior Market Research Consultant, Power Systems Research

During the webinar, the presenters will discuss

• Production forecasts for construction equipment in North America, South America and Europe during 2021.
• The key drivers for production and demand on the construction equipment segment. 
• Developing strategies in engine development surrounding Stage V, Tier 4 and ROW (UN) territories and evaluating how COVID has affected business and the expectations for 2021. PSR

If you are involved in the production, sale or purchase of
construction equipment, you’ll want to participate in this webinar.

This information comes from industry interviews and from two proprietary databases maintained by Power Systems Research: EnginLink , which provides information on engines, and OE Link, a database of equipment manufacturers.

Market Share: MTD dominates the Shredder industry in the U.S. with 86% of the total units manufactured. In second position is Ardisam with 6.5%. Third, is Mackissic with 5.5%.

Exports: Collectively, up to 30% worldwide.

Trends: In 2019, production of Shredders in North America decreased 3.5%.  Production in 2020 is forecasted to drop another 8%.  The demand for chore products has remained stable over the last few years in both commercial and residential segments.

Despite COVID-19, economic and weather-related factors, yard upkeep and maintenance remain important to homeowners. Patriot Products expects production to nearly double in 2020 due to stay-at-home mandates that have increased lawn upkeep along with the demand for products made in the USA. Overall, expect Shredder production to increase up to 10% by 2025.  PSR

Carol Turner is Senior Analyst, Global Operations, at Power Systems Research