Shared Mobility To Take A Backseat Due To Social Distancing: Rajan Wadhera, Prez- SIAM

Society of Indian Automobile Manufacturers’ (SIAM) latest data indicates that there was nearly 50 per cent decline in the sale of passenger vehicles in June 2020 vis-à-vis last year with PV sales plummeting by 78 per cent for the ninth quarter in a row in the April-June period. Speaking to reporters earlier via video conference, Rajan Wadhera, President, SIAM maintains that people are now increasingly gravitated towards personal vehicles rather than a public transport. He also affirmed small cars and motorcycles will witness an unprecedented growth. This is despite fact that he is anticipating a degrowth of 26-45% depending on the vehicle category during this Financial Year. Below are the edited excerpts of the e-interaction:

With people shunning away from crowded places, do you see personal mobility gaining traction in the future?
There will definitely be a change in the consumer behaviour post Covid. In the new behaviour, personal mobility going up. Obviously, you are not going to sit close to a person whom you don’t know in a public transport. You are not sure of the person who is sitting next to you in a three-wheeler. So as a consequence, you may wish to go to your office on a motorcycle rather than on a cab. This will result in a higher purchase of two-wheelers.  There are indications and discussions where consumers are talking on various forums that personal mobility may go up and shared mobility may suffer. Not that it has already happened, we can see shared mobility taking a backseat.

Are you already witnessing that trend?
What have we sold? We have hardly sold anything. We cannot ask a customer whether he is buying a car or bike because of social distancing norms. These are consumer behaviour indications that you formulate from the ecosystem. For instance, when you see the media persons talking or experts giving their views or consultants forecasting certain trends. We don’t have data to qualify what I said, these are the trends that we see will happen especially with respect to small and compact cars and two-wheelers.

As the lockdown restrictions are getting eased, when do you see the road to recovery? Also, when do you see the fresh line of investments coming in?
Automobile companies have taken adequate steps to reboot its manufacturing operations but capacity utilisation remains abysmally low.  It would be no exaggeration to say that it will take another three to four years to reach the peak level of 2018 (volumes). At this juncture, there is enough capacity in the sector and hence no (additional) investment is needed there (for capacity augmentation). Moreover, the auto industry has invested heavily for the transition (from BS-IV) to BS-VI emission norms in a compressed timeline. Coupled with that of last year, we are looking at a decline of 50 per cent in two years. When the demand is half, I don't see any case for investment in the sector.

Would you like to shed some light on the Atmanirbhar programme (Self-reliant mission) of the current govt?
Around 70% of the components (on an average) are indigenised but due to the migration to BSVI emission norms, imports of certain parts have surged in the range of 1-6% and these will continue until the time homegrown components manufacturers develop the required expertise and scale for the same.

With the entire industry reeling under a prolonged slowdown, are job cuts imminent?
Although there has not been severe retrenchment but it cannot be ruled out if the slowdown persists.  When the industry continues to nosedive, OEMS are bound to resort to such cost rationalisation programmes and employee cost is among the most significant ones

Do you have any update on sales of BS-IV vehicles?
The matter is sub judice but the auto industry has requested the Supreme Court to allow registrations of all such vehicles sold till March 31.

Will investments towards alternate fuel technologies like EVs also get impacted?
Among the casualties of the current situation will be electric vehicles, where companies are no longer in a position to invest in the new technology and it would need government support for India not to miss the EV revolution. You can't keep on borrowing money and deploy your limited resources towards these technologies. Even if you intend to, if you do not have revenue you cannot invest. The necessity of a dialogue with the government for long term planning and for providing support to the industry and creating the infrastructure so that the country does not miss COVID-19.