[ad_1]
The Indian automotive industry is seeing robust growth, with new peaks expected for various segments. On the other hand, improvement in the supply chain, the expected impact of the recession in global markets, could have an impact on the growth of the automotive industry. In a freewheeling interview with Financial Express, Vinod Aggarwal, President, the Society of Indian Automobile Manufacturers (SIAM) and President & MD, Volvo Eicher Commercial Vehicles (VECV).
How do you assess the current dynamics across auto sector, especially with new norms kicking in, cost increases and muted demand in many segment?
Due to the new emission norms and regulatory changes the costs have gone up and the entry-level is a more price-sensitive market. The second hypothesis is that in the rural economy there is still some stress. The rise in the cost has affected the buying sentiments.
What is your outlook for 2023? Has the supply chain issue been sorted?
As far as the supply chain issues are concerned. I think they’re mostly resolved now. Basically one has to do proper planning for procurement and maybe keep more inventory for some of those critical items. But more or less it is settled so now we are able to produce whatever is required. I think the supply chain situation will improve further next year.
There is a growing concern about recession. Do you see the Indian auto industry is cushioned adequately for such a shock?
The global situation will have some impact on exports, but domestic consumptions are intact as the domestic economy is doing well. We have a GDP growth of around 7 percent. I see no reason why our domestic consumption should not continue to grow; exports there will be some impact because of the global situation. If you especially see the South Asian markets are having a foreign exchange situation. We were exporting a lot of trucks to Bangladesh and Nepal so definitely those are impacted because they don’t have the funding exchange to buy the trucks.
With BS VI stage II set to kick in, safety guidelines and other regulatory norms coming in, do you see the auto industry well prepared? Will there be any kind of cost increase?
No, it will not increase as much as it was increased during the BS IV to BS VI, this time the increase will not be that much. Definitely a lower single-digit percentage.
There is a growing acceptance of CNG models in the PV segment. Even in the CV space, new CNG models are being launched. Your views on this growing trend?
CNG had become very popular around a year back because it is an economic proposition (CNG fuel prices) to buy a CNG truck or car. But with the increase in gas prices, the entire equation has changed, it is not as lucrative at the current prices as it was around a year back. Therefore, CNG vehicle sales have got impacted severely because of the CNG prices.
Do you expect the CNG prices to come down, especially with the Russia-Ukraine war impact?
One has to see how it pans out because it is always linked to the international prices of gas. There are some committees, which are aware of this situation, and we have also taken up with the relevant ministries. Let’s see what government comes out with the formula on this, that, and how to address this. But currently, this is a problem in that CNG prices are not very attractive to consumers.
Given the Budget is around the corner, what are your views on the demand for rationalisation of GST for the automotive industry?
Look, the GST change is also linked to various other factors. It is not the various state governments, and the centre is involved in that unless there is consensus to reduce GST, so there are challenges.
The government should continue to spend more on growth projects, infrastructure, and all other avenues like that. As an industry, we would be happy if the government continues with the growth-oriented approach, and they should continue to be slightly more liberal in managing their deficits. The government should continue to spend more money on infrastructure and on other CAPEX projects. Like last year, the allocation was very good, with Rs 750,000 crore and we need that as we are developing the economy. We need the capital expenditure.
Secondly, of course, for the rural consumers, the government could see how to address the pain points. If they’re impacted by the price-sensitive situation and are deferring purchases, there should be efforts how to bring them back.
How do you assess participation at the Auto Expo 2023?
I think we have fairly good participation, and we have no issue as such.The overall booking space is almost similar to what it was there last time. Every company has its own strategy when it comes to this type of event.
[ad_2]
Source link
