‘There is a lot of turmoil and hence the automotive industry will take time to recover’

'The need of the hour is to first look at the reasons behind the slowdown and then work towards resolving them. We need to look at what difficulty each sector is facing'

By:February 13, 2020 3:42 PM

Steelbird Tyres, which has been marking its presence at for the last 10 consecutive years at the Auto Expo Components, in the 15th edition of the biennial event, launched new tyre patterns, face masks as well as high-performance air filters. On the sidelines of the same, Express Drives has a detailed interaction with Manav Kapur, Managing Director, Steelbird International on the ongoing industry trends, the current job situation in the component sector and what’s the way forward. Following are the edited excerpts.

Can you shed some light on how the downturn has affected the auto industry as a whole?

The auto component industry is obviously going through a downturn. The need of the hour is, first, we need to look at the reasons behind the same and then work towards resolving them. We need to look at what difficulty each sector is facing. For instance, you can categorize the auto sector in three major segments. One is the passenger car segments, second is the commercial vehicle segment and the third is the two-wheelers segment. All these three sectors have different factors which are affecting the growth.

Talking about the two-wheelers, it is very clear, the reason is the high insurance cost. Because of the same, the acquisition cost of a two-wheeler has gone up. As soon as the new norms where implemented, the resulting Rs 4,000 to Rs 5,000 difference impacted a two-wheeler buyer at a large scale. For someone buying a four-wheeler, this difference might be negligible, but for someone who is buying a Rs 50,000 two-wheeler, a difference of 5,000 is a 10 per cent difference which is not even financeable.

In the commercial vehicle space, because of the introduction of the GST, the stoppage that we had was reduced, the vehicle efficiency increased, their usage increased and because of the axle-load norms the capacity utilization has also increased. In a way, the supply side smoothened out, which means that from every truck, you can now get an increased output. So that’s why there is a downturn, however, there is no downturn in the industry as such.

In the passenger car segment, the reason for the downturn or reduced sales is that loan availability is not there. After the NBFC crisis, they are being looked at very intricately. As a result of this, the consumer finance has gone down in passenger vehicle space. And this is the reason why loan rejection rate keeps on increasing. In recent times, the loan rejection rate has gone up from 4 per cent to 14 per cent. So these are the different reasons why the auto sector has gone down. And for the industry to get back to where it was, the same needs to be addressed at the earliest.

What are the electric vehicle-specific products that you are showcasing at the Auto Expo Components 2020?

At the last Auto Expo Components, we introduced a specifically designed tyre for e-rickshaws. Before that, e-rickshaws used to deploy two-wheeler tyres. Now though they have tyres that are made especially for this job.

What is the current situation of jobs in the auto components industry?

Jobs are still going down. Last year, ACMA had forecasted job 1 lakh job losses. I do not see any recovery on that as of now as nobody is increasing production capacities as of now. Whatever the job loss has been so far, hasn’t been recovered as of now.

When do you see the Industry improving from the ongoing slowdown?

For the industry to be improving from where it is right now, it will probably take longer than 6 months. The reason why I say this is because these issues have dented the sentiment of the buyer. Even if the interest rate goes down or there is loan availability, there is fear in the mind of the buyer. In addition to this, the BS6 has arrived, which is pushing the prices further high. There is a lot of turmoil at the same time and hence, recovery will take some time.

What steps a tyre manufacturer should take when it comes to educating the aftermarket buyer?

We have started focusing on the aftermarket since the OEMs have started to experience a reduction in volumes. We do a lot of work in the aftermarket as well. Definitely, there is some responsibility with the tyre manufacturer as well in this regard because educating the customer on what tyre to use is very important. We are doing our bit, we are telling them when to change the tyre, what is the safe depth of the tyre or how frequently they should check the air pressure etc. We educate them through various modes, through posters or digital media among others. But the fact of the matter is, it’s not an easy task to communicate any message to such a wide audience.

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