How do you asses the ongoing challenges in the global automotive industry, be it freight, semiconductor shortage, Russia-Ukraine / China-Taiwan conflict, etc?
This are very challenging times. We see multiple challenges coming time-and-again new challenges appear and then disappear. What we as a company have done is that we have been on our toes and are very responsive to the global scenario. It was during Covid when electronics went up through the roof and the semiconductor shortage happened, but also logistics challenges such as containers getting jammed up in the world. A lot of factors happened, and I believe somebody will write a book to explain this whole mess.
But one thing is very clear, Motherson Group’s focus on the automotive became even stronger. We are seeing things play out really well. Every challenge the industry has got be it OEMs, suppliers, dealers and everybody, they have found ways and means which are amazing and ingenious to solve these particular problems. But yes, in the short term it really affects the industry.
Till date, you have acquired more than 29 companies. And in fact, Last year we saw Motherson making smart gains by acquiring new companies at low valuations. What is your acquisition target for this year?
It’s an ongoing process, it is not as we wake up in the morning and decide we want to acquire a new company. Our focus is always on the customers, they tell us which companies they want us to take over and help them because they (target company) maybe in trouble at that point of time. Because even if one component is missing a car cannot be made. We have a clear vision to be a preferred global sustainable solution provider.
What’s the impact of the advancements in vehicle technology and the demand from OEMs for more integrated supplies on smaller players?
I don’t think it will affect SMEs (small & medium enterprises) so much because they cannot or want to do it so much. But I think the situation depending on the country and the OEMs in that country expects will throw challenges to them (SMEs). It is not about small or medium-sized companies, even huge companies are falling at the moment.
How much disruption will the CASE (connected, autonomous, shared and electric) megatrend cause for the traditional component business?
CASE is something where the jury is still out. I personally believe that at least in the next five years till 2025 it will play out in a big way. Coming to autonomous it has other problems, it has its own problems. Because in these uncertain times completely autonomous cars will be very difficult for the government to give approval for. There are lot of challenges, but I am sure maybe it (megatrend) becomes a common norm in 2050 or 2060.
Just talking about CASE its not easy, but if the government is for it, then it will definitely happen.
Is there a delay in your target to attain the $36 billion (Rs 2,84,040 crore) revenue?
We all sat down in December 2019 and evaluated. We were seeing the early play of Covid-19 in China, because we have 29 facilities there. The Group took a very pragmatic decision, we said 75% of our turnover will come from automotive. We have four new verticals where we will get $9 billion (Rs 71,010 crore) from there. We kept a vast number for all the people to be clearly guided by the Group. That’s how we reached that target. The Covid-19 pandemic carried out for 2 years inspite of that we are not going to rewrite our target or the course either. We see that many opportunities will be around the corner and we will live with that.
Many start-ups are entering the automotive market and are now valued at unrealistic numbers even before selling/delivering their first product. How do you view this phenomenon?
What I can say is that whenever people focus on valuations and not on the product, things will go wrong. And wind will be taken away from the sail if you do not focus on the product. I don’t say what they are doing is right or wrong. The market is king whatever they decide, they do. I think when people focus more on valuation, unicorns or whatever you may call them, instead of focussing on product there are lot of ups and down.
One of the interesting things that up till now no car company in the world has asked us to look at any start-up, which has to be sort of resusicated, if it has died, they let it die. That means there is no urges for the carmaker to revive. You may say that these guys are just start-ups, but the carmakers are closely watching what is happening with the start-up environment and you can see many of the carmakers are participants in these companies. But I don’t think they want it, there are lot of investors putting in the money and they say let it burn. I don’t think they think twice about it.
How do you see the Indian market growing over the next few years? What are the new challenges and opportunities in the global automotive market?
I think the car market is very sturdy and the demand is robust. A lot of people try and give colour to the demand, but I am telling you mobility is here to stay. It is not going to be something that is there for the short-term. We were recently in Europe, and we couldn’t even find a car even on rental basis, that’s the kind of demand in the market. I think people have understood that their life is not a telephone, it is not an iPad, you need mobility. You need to go out. I personally think while there will be interesting challenges coming around. Environment and sustainable mobility are extremely important, I think the solutions will be found by the people themselves and I don’t have any doubt that the automotive industry is going to go from pillar to pillar strength.