Automotive World‘s fourth Megatrends India conference opened this week in Chennai. The two-day event, which focuses on the commercial vehicle and passenger car industries, began with a panel discussion featuring four of India’s CV industry leaders.
Chaired by Automotive World, the debate looked at how the megatrends shaping the Indian automotive industry can help the CV sector to grow out of its current lengthy decline and return to the previously expected levels of growth.
The panel, which consisted of Daimler’s Marc Llistosella, Tata’s Ravi Pisharody, Anders Grundströmer of Scania and A. Ramasubramanian, President of AMW, initially displayed unity when the discussion focused on overcoming the current CV sector crisis. However, there was a clear indication that each OEM has a different long-term approach and market outlook.
Beyond the 2014 election, growth should return to the Indian CV sector within three to five years, as the need for fleets to replace vehicles outstrips the ability to maintain existing aging stock
An instant boost to sales would come from a correctly organised scrappage scheme, suggested Marc Llistosella, adding that added benefit would come from removing older, polluting and unsafe trucks from the roads. However, it was agreed that any sales relief would only be short-term.
Also short-term is the uncertainty surrounding the upcoming elections, expected in May. A strong government will help drive the market, but only when coupled with the appropriate pressure from consumer demand.
Beyond the 2014 election, growth should return to the Indian CV sector within three to five years, as the need for fleets to replace vehicles outstrips the ability to maintain existing aging stock. At the same time, the demand from India’s growing middle class for goods and services will drive the need to increase fleet size.
On the subject of goods and services, the always-coming-never-here Goods and Services Tax (GST) cannot be introduced too soon – maybe next year, grinned the four OEM representatives.
With January 2014 marking 23 consecutive months of falling truck sales, those still treating the downturn as cyclical appear to have an increasingly difficult time convincing those who disagree. But at Megatrends India 2013, the panel agreed that sales conditions would remain tough until after the elections in mid-2014; so, if not cyclical, then at least in line with expectations. That doesn’t change the fact that the industry is on its knees, as Llistosella put it.
When the truck market recovers, the next peak will be higher than the last, said Ravi Pisharody, adding that the next trough will be less deep too
Even a future-looking discussion is unable to shy away from the imminent federal election. Short term, the outcome of the election matters, as the industry waits to see what the shape of the new government will be. Longer term, the panel agreed, it’s of less importance. When the truck market recovers, the next peak will be higher than the last, said Ravi Pisharody, adding that the next trough will be less deep too.
And it’s on the long-term game that the newer players in the market – AMW, BharatBenz and Scania – are focusing. The OEMs may not agree on everything, but on one thing they do: India remains, and will continue to be, a viable truck manufacturing location, not just to serve the domestic market, but also for export. It’s time to raise product quality to global standards, and make the world see “made in India” as a positive thing.
Martin Kahl is Editor, Automotive World.
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