Auto Inc expects double-digit growth; PV volumes will reach 3.5 million in FY23, Auto News, ET Auto

In FY21, the PV industry in India recorded sales of 2.7 million units and is expected to reach around 3.1 million in FY22.

New Delhi:

After the long-term impact of several unprecedented factors, India’s auto industry is optimistic about achieving double-digit growth in the coming financial year, market leaders said at a event titled “Reimagine 2022: Preparing the Indian Automotive Industry to be the Future”. -Ready’ produced by C2FO in association with ETAuto this Friday.

Driven by strong consumer demand and the need for personal mobility, Rahul Bharti, Executive Director – Corporate Planning, Maruti Suzuki, said FY23 will be a “good year” for the company and the industry in his outfit. Despite the disruption in the supply chain, it is estimated that sales of up to 3.4 to 3.5 million passenger vehicles (PV) should be achievable during the year.

In FY21, the PV industry in India recorded sales of 2.7 million units and is expected to reach around 3.1 million in FY22.

Although Bharti is positive about the growth story, he points out that there has been a sharp decline in the compound annual growth rate (CAGR) of PV sales since the pre-Covid period. It fell from 12.6% in 1990-2000 to 1.3% in 2015-2020. He said India is not progressing in terms of car ownership and affordability, which in turn depends on car prices, per capita income and regulatory structure.

Nirajan Gupta, CFO of Hero MotoCorp, is optimistic about the two-wheeler’s growth story. According to him, the mobility requirement is not disappearing. Although demand on the rural side has been weak, the fundamentals of the agricultural sector, rural economy and crop cycles remain bright.

He said two factors led to the drop in rural demand. First, the second wave of Covid-19 was too bad to shake consumer confidence and people started saving money instead of borrowing to spend. The second factor is the return of migrant labour, the sole breadwinner, to their villages, depriving families of their income.

However, as different sectors open up, more people will return to work and reliance on a single source of income will be less and people will be able to save money to spend, he said.

“In the hinterland, there is still a part of Indonesia (10 million people) that has no mechanized two-wheelers at all, and that’s a huge number. Two-wheelers don’t are not about style here; it’s about necessity. So, the opportunity for growth is immense. There’s no reason double-digit growth shouldn’t happen for the industry.” , did he declare.

The immediate impact could be overlooked due to the geopolitical situation, but long-term demand will return. Whereas for stock markets, people look at the short term, but when we invest in companies, we look at the long term, Gupta added.

In the meantime, a few factors need to fall into place, he said. Deeper finance penetration, an environment conducive to growth with easy regulations, and OEM collaboration are the most important among them. “I think we are very competitive, but we collaborate badly.”

Looking back on the past two heartbreaking years, GN Gauba, Chief Financial Officer of Motherson Sumi Wiring India, said that the auto industry has always been tested, but the positive part is that the Indian auto industry is a very family. united. OEMs and their supply chains work closely with each other. Despite the challenges faced during the pandemic, the industry shifted manufacturing to ventilators and even during a severe chip shortage, it managed to be flexible.

Referring to vendors, Bharti said there is weakness at Tiers 2 and 3 in terms of automation, investment in the right equipment, management bandwidth, etc. “If we can strengthen this stratum, the Indian automotive industry will get a huge boost. The problem is that while the number of Tier 1 suppliers is around 400 to 500, Tier 2 suppliers are counted by thousands. So it’s a scalable issue. But what we’ve tried to do is ask our Tier 1 suppliers to instill best practices from shop floor, finance, etc. into Tier 2. »

Jitendra Barola, Chief Financial Officer of MG Motor India, said, “I believe consumers need mobility with technology. Compared to Suzuki, we are nowhere but focus on different revenue streams. We have created a platform not only to sell the car, but also to be with the customer day in and day out. »

India’s road to zero carbon

Expert panelists at the event said that although electric vehicles (EVs) are technologically strong, in the future all forms of energy must co-exist to achieve the goal of decarbonization in the country.

Speaking about the two-wheeler industry, Hero MotoCorp’s Gupta said most of the electrification in the next decade will be in the scooter segment, as motorcycles require a lot more battery capacity, more power , more autonomy and it will not be affordable.

“ICE and electric vehicles will co-exist for quite a long time. Motorcycles, which currently occupy 70% of the industry in India, will migrate to electric vehicles over the next decade. And the first decade will be more dedicated to scooters, which currently occupy 30% of the industry,” he said.

The country’s largest two-wheeler maker unveiled a new brand identity called “Vida” for electric vehicles last week. Its first electric vehicle is expected to be introduced on July 1 this year.

Representing the passenger vehicle (PV) industry, Bharti of Maruti Suzuki noted that decarbonization is a broader perspective and in itself includes several technologies that are not the end, but means to the end. “Electrification is a family of technologies including hydrogen cars, plug-in hybrids, powerful hybrids. But there is also natural gas and the latest technologies, biofuels,” he said.

As an industry, we need to develop uniquely Indian solutions, and we also need to be aware that in the process, this will increase the price of vehicles. We need to look at how we can capture the bulk of fleet emissions and reduce CO2 to a bare minimum and in some way look at emissions per car and what percentage of the portfolio we can cover, Bharti suggested.

Although there has been a major investment in the EV industry over the past year, funding for Indian EV technology startups was very high in 2021, reaching nearly INR 3,307 crore despite pandemic concerns.

Commenting on the same, Gupta said, “It is always true that cash burn only lasts for a few years and gives rise to cash gains at some point. It is now a phase of huge investments and many players arriving. But survival will be for those who get the right client and long-term game. Multiplication and fragmentation will eventually lead to consolidation.

The event was part of the Thought Leadership Series organized by C2FO in association with ETAuto. Industry stalwarts gathered to brainstorm ideas and share insights on the changing landscape in the automotive sector, readiness for business transformation, the need for innovation and the future leaf of the Indian automobile industry.

Read also :

Sales of passenger vehicles decreased by 6.5% to 262,984 units in February 2022, compared to 281,380 units in the corresponding month of 2021. Sales of passenger cars amounted to 133,572 units, vehicles vans at 120,122 units and vans at 9,290 units in February this year.

Luxury brands are aggressively targeting the country’s wealthiest. Tesla is negotiating tax breaks to boost sales in India, while Mercedes-Benz is rolling out a locally assembled EQS, the electric version of its flagship S-Class sedan, this year. BMW also plans to launch several plug-in models.

More electric vehicles on the road, the availability of newer models and an increase in the number of charging stations should encourage buyers to switch to electric vehicles.

Comments are closed.