Let us take a look at the numbers for the nine-month period - April 20 till December 20 and compare this with the figures of the same period last year:

While the above numbers may seem depressing, there has been a cause to cheer for the industry especially since September 2020, when the automobile majors posted healthy numbers.

What was the driving factors for this growth?

• Good monsoon and growth in the agricultural sector
• Pent up demand
• New models introduced
• Fear to use public transport and desire to own a vehicle
• The numbers may not reveal the entire story and what is sought in this article is to see how this industry will evolve.
• The COVID experience has seen the following major shift:
• Work from home – this could continue over the next few years
• Online classes
• Reduced usage of public transport – may change if crowding is avoided
• Drop in car pooling
• Release of movies on the online platform
• Use of video conferencing as an alternative mode of communication as opposed to physical travel.

Whether these experiences would sustain or continue will depend on the reduction in fear factor, desire to socialise and the success of vaccination.

Given the above background, we shall try to examine what could be the future of the various segments of the automobile industry.

Among the passenger vehicle segment, the utility vehicles (mainly sub 4M category) have managed to hold itself together posting only a moderate decline of 6.69 percent indicating a preference among the affordable consumers to this category. This phenomenon is on account of the fact that many new models were introduced in this segment and changing preference of the consumer to buy a utility vehicle bearing in mind that usage post- COVID would be restricted for moving for work or within the city and the usage would be more for trips for recreational purposes and family get together. This segment will see more action in the ensuing months with more new models and price warfare.

The luxury segment of the passenger vehicle will see a decline and this trend is more likely to continue over the next couple of years.

The commercial vehicles segment is a barometer of economic growth and the decline in this sector is definitely a cause of worry.

A healthy growth in this segment indicates the movement of both goods and persons which augurs well for the economy.

The medium and heavy commercial vehicle segment requires the maximum support with a steep drop in the numbers although the numbers in December 2020 shows some revival. However, the segment can see growth only if there is a sustained policy of replacing old State Transport Undertaking and Defense Vehicles by setting up a dedicated corpus fund for this along with measures on the part of the Government to invest in infrastructure projects.

The average urban and rural consumer’s purchasing habits have seen a change with a growing dependence on e-commerce portals to buy goods as opposed to physical travel. This trend is likely to see more traction and hence the movement of goods from larger hubs to smaller hubs will require smaller vehicles and hence there will be an uptick in demand for commercial vehicles, especially in less than five tonne carrying capacity.

The change in the consumer behavioural pattern coupled with usage of the services of food delivery and goods delivery apps and a good monsoon across India will see a sustained demand in the two-wheeler segment.

Another shift which will gradually happen is that there will be higher acceptance of electric vehicles once they become affordable. This would mean mechanical component manufacturers will have to shift their focus to develop electrical components which will be the future.

Lastly, the following key factors will play a large role in the ensuing period to sustain the momentum:

• Introduction of new models
• Controlling the runaway fuel prices
• Price increase by OEM’s and its effect on buying sentiments
• Implementation of the Performance Linked Incentive Scheme under the Atma Nirbhar Scheme
• Government investment in infrastructure projects
• Sorting out raw material shortages especially semiconductors and steel
• Putting Tier-2 and Tier-3 component manufacturers back on track
• The success of the vaccination programme.

Time will only reveal whether what has been stated in this article will actually pan out the way it has been predicted. (MT)

• NB: G Viswanathan is the Director, Accounting and Business Support at ASA & Associates LLP. Views expressed are personal.

The European Union voted in favour of imposing extra tariffs on China-made EVs by up to 45 percent on 4 October 2024. Threatening a broader trade conflict with a country that has already vowed to protect its companies and is considered as the factory of the world, the move has been criticised by the auto industry and various EU member states.

With growing demand for EU and China resolving their differences through dialogue, the China Council for the Promotion of International Trade is known to express that it is opposed to be the move.

With the technical teams from China and the EU set to resume talks on 7 October 2024, the situation in EU as far as the auto OEMs like Volkswagen Group, Stellantis and BMW Group are concerned, there have been instances of profit warnings.  

Weak demand, rising costs, global competition, trade wars, geopolitical situations, subsidies and company-specific factors are among the reasons being underlined for the profit warnings by European automakers.

Receiving necessary support with 10 members backing the tariffs, 12 abstaining and five members – including Germany – voting against, the European Union, claim sources aware of the development, has been urged by the auto industry to negotiate with China for better terms and conditions rather than to reach the level were a trader war looks eminent.

Present in the China market for a decade or more, many European automakers seem to fear if the tariffs imposed on Chinese EVs will lead to negative consequences in that market for them.

Volkswagen is known to have said that the tariffs are ‘the wrong approach’. There is a need for the two sides to negotiate and find the middle way, mentioned an industry source in Germany in response to the tariffs by EU.

Image courtesy: EmDee (Wikipedia)

The Association of Indian Forging Industry (AIFI), the apex body representing the forging industry in the country has announced its new officer bearers for 2024-26. 

The committee has elected Yash Munot as the new President of AIFI, while S.  Ravishankar was elected as the Vice-President.

Munot, who succeeds Vikas Bajaj, had previously served as Vice-President of AIFI from 2020 to 2024, is now also the youngest to be appointed as the President in the organisation's history. 

He currently serves as the CEO at Varsha Forgings and the Managing Director at KCTR Varsha Automotive. Munot begun his journey in the forging industry in 2005 joining his family business - Varsha Forgings. He was also instrumental in organising major industry events like IFC 2011, Forgetech  India 2016, Asia Forge 2019 and ForgeTech India 2023. He has served as the Western Region Chairman from 2018 to 2020. 

“The forging sector in India is at a pivotal juncture, with tremendous opportunities for innovation and growth. Our focus will be on fostering collaboration within the industry, driving technological advancements and promoting sustainable practices. I am committed to working closely with all stakeholders to ensure that our industry not only thrives domestically but also strengthens and enhances its global footprint. Together, we will build on the strong foundation laid by my predecessors and strive for excellence in every aspect of our work," said Munot.

S Ravishankar added, “I will strive for advancing our industry’s progress and tackling the challenges presented by a rapidly changing global landscape. Our priorities will include boosting competitiveness, driving innovation and equipping our members for future opportunities. I look forward to embracing the exciting prospects ahead and contributing to AIFI’s continued success during this transformative era”

He (Ravishankar) currently serves as the MD at Super Auto Forge and has over 25 years of experience in the auto component manufacturing industry. He is a Manufacturing Engineer with Bachelors degree from Annamalai University and Masters degree from The Ohio State University.

It was in 1997, after working in Detroit for two years, Ravishankar returned to India and joined his family business at Super Auto Forge. He has been instrumental in developing the international business of SAF and led the initiative to establish marketing offices in Detroit in 2001, followed by Belgium in 2011. He has been the Chairman of Indo American Chamber of Commerce for the period 2008 – 2009 – Tamil Nadu Branch and currently serves on the Southern Regional Committee of ACMA since 2021.

Automechanika Frankfurt has cemented its position as the leading international trade fair for the automotive industry with the successful conclusion of Automechanika Frankfurt 2024. 

The slogan of this year’s Automechanika was ‘Driving Transformation’, with topics such as electrification, vehicle connectivity, driver assistance systems and digitalisation taking the centre stage. The fair was held from 10 to 14 September 2024 and saw 4,200 companies from 80 countries displaying their products and solutions for retail, workshops and industry. Spread over an area of 320,000 square metres and 26 hall levels, the event witnessed a total of 108,000 visitors from 172 countries.

Visitors had the chance to see cars with alternative drive systems up close, such as electric, hydrogen, and hybrid models, and even take a ride in the Future Mobility Park and the related expert forum Innovation4Mobility. For even more highlights, there were brand-new event types available, such as an exhilarating rally. Ninety-four percent of attendees, 70 percent of whom were foreign visitors, expressed satisfaction with the event, not just with the trade fair's offerings but also with their aims being met.

An emphasis on sustainable technologies, products and solutions was highlighted at Automechanika this year. Several talks on remanufacturing and circular economy tactics were held on the stage in the new Sustainability Court in Hall 5.0. This year also saw the opening of ‘Ambition’, a dedicated Gen Z section in Hall 3.1 with live acts, panel discussions and succinct, fascinating presentations to pique the interest of young people in the automotive professions. This action was taken as a result of the well-known lack of qualified workers in the automobile sector.

Detlef Braun, Member of the Executive Board of Messe Frankfurt, commented, “Even in the midst of the digital transformation, the industry once again demonstrated its wealth of innovation, providing countless highlights over the course of the five-day event. Together with our exhibitors, we were able to find the right players to present the most important topics – including alternative drive systems, sustainability and the use of AI and robotics in the automotive aftermarket – on the stages and in the exhibition halls. We are also delighted by growing demand from both German and international visitors.”

Michael Johannes, Vice President Mobility & Logistics, Messe Frankfurt, said “Never before has Automechanika in Frankfurt had a supporting programme and range of events like this. Our roster of presentations and practical workshops covered a wide range of topics, including bodywork and paintwork, electric vehicles, commercial vehicles, caravan repair, 3D printing, detailing and much else besides. These were very well received by the professionals, and students and pupils took advantage of the opportunities on offer to find out for themselves what some of the automotive trades and professions are like. One of this year’s new additions was a programme and area devoted especially to Generation Z. We wanted to draw their attention to the professional opportunities that are available in the fascinating world of the automotive industry – and we were very successful.”

Castrol India, a leading lubricant manufacturer, has announced that it has achieved a significant sustainability milestone by increasing recycled content in its high-density polyethylene (HDPE) plastic bottles to 50 percent. 

With this, the company aims to achieve 2,600 metric tonnes of annual recycled plastic usage in its packaging portfolio by 2024.

The step builds upon its previous actions to help make its packaging more sustainable, including the commercialisation of 100 percent recycled bottles for POWER1 range in 2022 and the incorporation of 30 percent recycled content across its entire bottle packaging in 2023.

This latest change aligns seamlessly with Castrol’s global PATH360 strategy, which aims to reduce its plastic footprint by half by 2030.

Sandeep Sangwan, MD, Castrol India said, “We are proud to announce this milestone in our journey towards more sustainable packaging. This achievement is a testament to the hard work and dedication of our team, who have overcome challenges to develop packaging solutions that meet our high standards for quality and aesthetics.”

In addition to packaging, Castrol India aims to have more sustainable manufacturing practices. The company’s production facilities utilise energy-efficient technologies and renewable energy sources to seek to reduce its operational greenhouse gas emissions.