Hyundai Motor India Ltd (HMIL) has flagged a temporary disruption to its manufacturing operations after a fire broke out at a key supplier's production facility in Tamil Nadu, highlighting the vulnerabilities that continue to haunt automotive supply chains despite improving industry demand.

In a regulatory filing on Monday, the country's second-largest passenger vehicle maker said a fire incident occurred on May 31 at a manufacturing facility operated by Mobis India Ltd in Irrungattukottai, Kancheepuram district. The supplier manufactures audio components and other automotive parts that are used in Hyundai vehicles. The company said no fatalities were reported in the incident.

Supply chain challenge emerges amid sales momentum

Hyundai said it is working closely with Mobis to assess the extent of the damage and evaluate the impact on production schedules. While the automaker did not disclose the expected duration of the disruption, it acknowledged that the incident would affect manufacturing operations in the near term.

"This incident will result in temporary disruption to Company's production. However, alternative sourcing and supply continuity measures are being actively explored to minimize the operational impact," the company said.

The development comes at a time when automakers are navigating a complex operating environment marked by rising commodity prices, supply chain uncertainties and evolving consumer demand patterns. Industry executives have increasingly focused on strengthening sourcing networks after repeated disruptions caused by global supply shortages over the past few years.

Dealer inventory to cushion customer deliveries

Hyundai sought to reassure customers and dealers that retail operations would remain unaffected in the immediate future.

"There is sufficient vehicle inventory in our dealer network to take care of the customer demand," the company said, indicating that existing stock levels are expected to absorb any short-term production impact.

The disruption comes just days after HMIL announced a price increase of up to Rs 12,800 across its model range effective June 1, citing higher input costs, commodity inflation and rising operational expenses.

Despite cost pressures, the automaker has maintained strong sales momentum. HMIL reported domestic sales of 47,837 units in May, up 9.1% year-on-year. Including exports of 13,300 units, total sales stood at 61,137 units, reflecting a 4.1% increase over the corresponding period last year.

The company's ability to quickly secure alternate component supplies will be closely watched by the market as it seeks to sustain production and capitalise on improving demand in the passenger vehicle segment.