Auto sector is being hit by Covid, container shortages, chip shortage, commodity price rise and now conflict, said Rajeev Singh, Automotive Leader at Deloitte India. In an interview with Tamanna Inamdar: ET NOW, Singh said demand has not only been hit in India, but globally. Edited excerpts:
We have really seen a robust recovery in demand post the second wave, as was being expected. What is the base demand that you have and is there a recovery there?
Auto sector has been under a lot of pressure in the last 18-20 months since the onset of Covid-19 wave. The sector has seen 4Cs already: the first C being Covid, the second being container shortages, the third is chip shortage and the fourth C is commodity price rise. I would say we have now the fifth C in the form of ‘conflict’ in the last six months.
We are nowhere close to the base demand. If you look at two wheelers, we used to sell about 20-21 million units about three years ago. But today we are still significantly away from that number. It is a clear indication that the entry level market somewhere has not yet revived. That is the reason why it is impacting both two wheelers at the entry level as well as passenger vehicles.
If one looks at even passenger vehicles, and this is not just India’s story but globally, we would touch 80-85-90 million units, the previous average, by FY23 and FY24.
India is no different. In India, we are not yet close to the base demand that we had prior to the Covid times. Same is the case in the commercial vehicles segment. While commercial vehicles numbers may look very good, we saw significant reduction in demand for commercial vehicles in the last year.
We are still see significantly lower commercial vehicles demand than what we had three years ago
We have lost a lot of market from an auto sector perspective during this period. I hope we stop with this fourth C and we do not see anything beyond this or the fifth C.
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