How the Automotive Industry in India is Preparing for the Future?
Published on : Sunday 03-05-2020
The Indian automotive industry is one of the major sectors contributing to the growth of the country’s GDP. The sector is seeing a significant transformation concerning its sustainable growth and productivity. It is predicted that India will emerge as the world’s third-largest passenger-vehicle market by 2021. It took the country around seven years to boost annual production to 4 million vehicles from 3 million.
However, in the fiscal year 2020, the country’s automotive sector is facing a lot of challenges. In the pre-pandemic period, the industry saw a negative growth of roughly 18%. In the wake of the Covid-19 pandemic, the situation also now get worsen mainly due to the ongoing lockdowns across the nation.
According to reports, the FY20 and FY21 are very challenging for the Indian automotive industry because of sluggish economic growth, pessimistic consumer sentiment, BS-VI transition, and changes to the axle load norms, liquidity crunch, low capacity utilisation and potential bankruptcies.
One of the major reasons for the decline of the automotive sector in the country is China accounts for 27% of India's automotive part imports and major global auto part makers like Robert Bosch GmbH, Valeo AS and ZF Friedrichshafen AG have factories located in the Hubei province. But due to the closure of the factories of these companies, there has reportedly been a delay in the production and delivery of vehicles like BS-IV compliant models.
Now automakers are in the race to load vehicles with tech and making inroads to digital transformation. Already, the level of technology and tech-driven services in popular models that are now hitting the roads in India. Telematics, arrays of sensors and 24-hour live assistance leading car manufacturers to upskill everyone from salespersons to mechanics, operate call centres and accumulate aggressive collaborations with tech companies.
When it comes to Covid-19 impact, post coronavirus related lockdown in China and resurface demand promptly indicating signs of a V-shaped recovery. Original equipment manufacturers (OEMs) expect domestic passenger vehicle sales to recover by the festive season of the calendar year 2020.
According to JM Financial, despite the ongoing slowdown in economic activity arising from coronavirus outbreak, the medium-term outlook for tractor sales remains positive, driven by strong rabi output, good reservoir levels and expectation of normal monsoon in CY20. It further said the tractor industry will recover ahead of PVs, followed by 2Ws and CVs.
The automobile industry in India will stand up once again into a transformed form, once this pandemic is over or under control. Rising demands will also play a key role in making this reality once the restrictions from the movement of people will be exempted entirely.