India's passenger vehicle market not likely to hit 10 mn mark by 2030: T. Suzuki2 min read . Updated: 05 Sep 2020, 02:38 PM IST
- The Suzuki Motor Corp. president urged auto component suppliers to invest in research and development (R&D) of products and aggressively localize raw materials in order to spur cost competitiveness within the industry
NEW DELHI: The size of India’s passenger vehicle market is not likely to grow to 10 million units per annum by 2030 due to the prevailing Covid-19 induced economic slowdown that has impacted sales significantly, said Toshihiro Suzuki, president and chief operating officer, Suzuki Motor Corp.
Speaking at the 60th annual convention of Automotive Component Manufacturers Association of India (ACMA), Suzuki also urged component manufacturers in India to invest in research and development (R&D) of products, improve quality and boost localization to improve the overall profitability of their businesses and increase share of exports from India.
In 2018, Osamu Suzuki, chairman of Suzuki Motor Corp., enthused by the potential of the Indian market, announced that the company expected passenger vehicle sales in India to grow substantially to 10 million units per year by 2030. Suzuki had at that time targetted sales of 5 million units by then and expected to hold on to the 50% market share. As a result, the company invested in a new manufacturing unit in Gujarat with a capacity of 750,000 units and intended to set up another plant of 750,000 units to take its total production capacity to 5 million in India.
“Earlier it was established that the Indian market may grow to a scale of 10 million units by 2030. We believe that these are achievable numbers. Only thing is that it may need a few more years. Compared to now, it is a huge increase," said Suzuki .
“The auto industry appears to be reviving faster than expected. This is could be because of the pent up demand due to no sales in April and May. It’s also a fact that people are now preparing for personal mobility over public transportation. The Indian government has taken an ambitious target of making India a $5 trillion economy in the next few years. This definitely means growth in the manufacturing and the automotive sector," he added.
Sale of vehicles in the Indian market has been on a decline since the second half of FY19 when the crisis in non-banking financial companies (NBFCs) started in the aftermath of bankruptcy of Infrastructure Leasing & Financial Services Ltd (IL&FS). Vehicle sales across categories fell around 15-25% across categories in FY 20 after registering a low single digit growth in FY19.
According to the Society of Indian Automobile Manufacturers (SIAM), vehicle sales across categories is likely to decline in the range of 25%-45%, across segments, in the current fiscal, due to the prevailing Covid-19 induced economic slowdown.
Despite witnessing decent recovery in retail sales, automakers like Maruti Suzuki and others are struggling to ramp up manufacturing due to disruption in supply chain network. The prevailing lockdown in different states, rising Covid-19 cases and increased inspection of imported parts from China have also caused major problems for auto makers and their suppliers.
According to Toshihiro Suzuki, to compete in the global market and attract global customers, it is very important that component manufacturers increase focus on improving quality of their products and only then India will be able to beat other nations on the global platform.
“Earlier, the volume in India was less and localization at times was not viable. However, in current scenario and seeing the future prospect localizing in India is viable. I urge all of you to aggressively localize raw materials, tools and machine and other equipment. This will go a long way to increase the cost competitiveness of the Indian industry in both domestic and global market," he added.