Indian automobile industry facing many immediate, medium-term challenges: SIAM

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slowdown and the COVID-19 pandemic has further impacted the sector pushing it back by many years, SIAM President Kenichi Ayukawa said on Wednesday.

Speaking at industry body SIAM’s 61st Annual Convention, Ayukawa noted that all auto segments like passenger vehicles and two-wheelers have witnessed a drastic drop in growth rates over the last 5-10 years.

“Even before COVID started, the Indian automobile Industry was facing a deep structural slowdown,” Ayukawa, who is also the MD and CEO of country’s largest carmaker Maruti Suzuki India, noted in the online event.

He further said that “in all four segments of the industry — passenger vehicle, two-wheelers, commercial vehicle, and three-wheelers, the long-term growth rate has come down drastically in the past 5 to 10 years even before COVID started.”

The COVID-19 pandemic has further caused negative growth for the industry pushing volumes back by many years, he added.

Ayukawa said that the industry is currently facing many immediate and medium-term challenges.

“Some of the immediate short-term concerns for the industry are: pandemic-related uncertainties and health of our people, global shortage of semiconductors, rising commodity prices, upcoming fuel-efficiency and BSVI Phase-2 regulations, shortage of shipping containers, and import restrictions,” he added.

Besides, the industry is also facing some medium-term challenges like ensuring a sustained demand, affordability for customers, localisation, preparing for long-term regulations, and new powertrain technologies, Ayukawa noted.

To overcome these challenges and bring back industry on the track of growth, focused action is required through some key enablers, he stated.

“SIAM and ACMA have together worked out a localisation roadmap with a target of about 15-20 per cent further localisation in next 2 to 5 years,” he noted.

The second enabler is having a long-term regulatory map, the industry leader noted.

“SIAM has prepared an approach paper for a long-term regulatory roadmap that takes care of all aspects and gives clarity on future investments,” Ayukawa stated.

The auto industry is also working hard on new powertrain technologies, he added.

Ayukawa also thanked Prime Minister Narendra Modi for rolling out a fitness-based scrappage policy just a few days ago.

“We will work with the Ministry of Road Transport and Highways for improvement and early execution. I would like to express my gratitude to the government for announcing a Production-Linked Incentive scheme for the auto industry and advanced chemistry cells,” he noted.