Global geopolitical headwinds, tightening monetary policy and the lingering effect of the COVID-19 pandemic have combined to create a gloomy outlook for the Indian automobile industry. Due to inflation pressure and the upcoming change in vehicle norms resulting in price hikes, the Federation of Automobile Dealers Associations (FADA) is cautious about the last financial quarter of FY23.

FADA president Manish Raj Singhania, while commenting on how December 2022 and calendar year 202 performed, in a statement, said, "The month of December went into a lull after 2 super months of October and November which witnessed adrenaline rush in the entire Auto Industry."

The domestic automobile industry, in December 2022, saw a fall of 5 percent with all categories in green except the two-wheeler (2W) segment. While categories like two-wheeler (3W), passenger vehicle (PV), Tractor and commercial vehicle (CV) showed growth of 4 percent, 21 percent, 27 percent and 9 percent respectively, the 2W segment dragged overall total sales by falling 11 percent.

Total vehicle retails, in CY22, grew by 15 percent YoY. The PV category during the same time clocked 34.31 lakh retails, the highest-ever retails to date. The 2W segment, on the other hand, saw retail sales fall during last month to after 2 good months.

According to Singhania, "Reasons like rise in inflation, increased cost of ownership rural market yet to pick up fully and increased electric vehicle (EV) sales, the internal combustion engine (ICE) 2W segment is yet to see any green shoots."

Also read: SUVs market share in India to grow up to 50% in 2023, says Hyundai India COO Tarun Garg

Indian motor show’s impact on the automobile industry

However, with the Indian motor show, also known as Auto Expo 2023, set to make a return after a gap of three years and 2022 being a strong year for the overall domestic automobile industry, industry experts suggest that 2023 is likely to be a great opportunity for the entire auto industry along with the component industry.

Sunjay Kapoor, president of the Automotive Component Manufacturers Association of India (ACMA), said more than 800 companies are participating at the upcoming Auto Expo, adding that “they had to turn away companies because we've run out of space."

He revealed that the theme has been put as ‘Technovation,’ which is about technology and innovation. Kapoor said, “The industry is transforming itself, disrupting itself and we're going to see a lot of innovation, technology, a lot of future technologies and everything that's happened over the last three years.”

Vipin Sondhi, chairman of the Confederation of Indian Industry (CII), national committee on Future Mobility, while mentioning the participation and Auto Expos in the past, said, "There's so much happening in terms of technological relevance and driven by either government regulation or business requirements, it's very important to be there, that is going to be key."

Sondhi also revealed that the upcoming auto show will showcase new fuels, only electric but hydrogen, LNG and CNG along with battery charging tech.

Also Read: India prioritised vehicle purchases over electronic and luxury items in 2022

No Chinese participation in Auto Components Expo 2023

Kapoor, while explaining no Chinese participation in the components export this time around, said, "In the mobility industry, the competitive landscape is changing."

"If you look at everything that's happening, in terms of China plus one and Europe plus one, there's a lot of focus in India, a lot of push towards India... We've got a good demographic, a lot of engineering talent and therefore we'll be attracting a lot of companies that will look at India as a sourcing hub.”

A lot of OEMs that want to expand their business are looking at India very seriously because of its good talent, ability to invest in technology and a large market that's growing and adding to the advantage of the country, said Kapoor.

Also Read: SUVs emerge as biggest selling models in India — Tata, Mahindra and Hyundai top players

Indian Auto sector’s expectations from Budget 2023

With the budget just around the corner, Sondhi believes that the government can come up with certain measures to boost India's attractiveness as an ecosystem.

He said, "Government policy has been fairly robust and I think the industry is responding to that. Whether it was the production linked incentive (PLI) scheme or the general scheme for investment, it's all been focused on future technology, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) 1 and 2 scheme."

“From a budget standpoint, we spend on infrastructure, which government spending has been going up every year. Especially in the 600,000 villages, if 50 percent can be spent there, it means more income, employment and mobility requirements. Whether it's trucks taking cement and steel or busses carrying people or passenger vehicles or entry-level mobility solutions,” he added.

Both Sondhi and Kapoor stressed the GST standardisation in the industry in the upcoming budget.

First Published:Jan 5, 2023 8:22 PM IST