However, he expressed optimism that increased government spending this quarter could positively impact CVs, along with a trickle-down effect on passenger vehicles (PV) and two-wheeler sales.
Additionally, Vigneshwar observed promising signs in the CV segment, including significant dealership deals, suggesting improved performance in the upcoming quarter.
Discussing electric vehicles (EVs), Vigneshwar described the segment as still nascent in India, though it is gradually gaining traction. He noted a shift towards EVs in the scooter market and the emergence of new entrants in the EV motorcycle segment, offering sufficient range to meet customer needs.
Below are the edited excerpts of the interview.
Q: You remain cautiously optimistic for the month of January. If you could break this down for us, what is driving the caution, and what is driving the optimism for you?
A: What is driving the caution is what has been happening the last year; it has always been a stop, go. Every month there has been some kind of a challenge, but the resilience of the market, with the OEMs and, of course, the dealers, have been working together to meet these challenges. The optimism stems from the fact that it has been lower than expected in December so we also feel that quite a few spillovers of sales have actually happened because of the postponement of decisions by customers. There is also a lot of optimism happening because the first quarter we feel is going to be good. This is due to the Auto Show, where quite a few new launches are going to be done, and product refreshes are going to happen. Few customers have also postponed the buying in general because they want a 2025 vehicle.
Read Here | After months of correction, CLSA turns to say ‘Hamara Bajaj!’
Q: If you could give us a sense of what the inventory levels or the dealers are at right now, and how do they compare with this time of the year in general? There has been a fair amount of discrepancy between what the company reports when it comes to wholesales and retail Vahan data as well. So we just wanted to understand that gap.
A: We simply go by the fact we compare SIAM data along with the Vahan figures, there are quite a few vehicles, which are still lying at the dealership lots. It is much better than what it was four months ago because we were at nearly 90 days of stock. Right now we predict we have about 55 days. The stocks have been coming down. I think the OEMs also have taken cognizance of this, and they have been reducing the dispatches. And we have been aided by good retails in the last four months. However, the buildup of stock had happened nearly five months before October. There was a slow build-up because of various reasons. Right now, I think it only makes business sense that we start reducing stock.
Q: What about the commercial vehicle space? Because that is the one that has seen some bit of sluggishness over the last few months, and you are expecting this to recover in the first quarter of this year, of the calendar year, considering the fourth quarter of a financial year is generally stronger for the commercial vehicle segment as a whole. What do you expect, or what could be the likely factors that would drive this recovery for the commercial vehicles?
A: The commercial vehicle segment has had a very, very small growth over the last calendar year. For example, it is about 0.7% this was due to a prolonged election followed by various floods and droughts in different parts of the country, and sometimes these floods and drugs happen across a few months in the same state. So this doesn’t augur well for CVs, and also the fact that the government spending on infrastructure has not yet, the tap hasn’t opened as yet. We expect this cannot prolong forever, and this quarter, there would be enough government spending in terms of infra. We should also have a trickle-down effect on the PV and two-wheelers sales. We are also seeing a lot of large deals in the commercial vehicle segment have been going on at dealerships and this gives us a very positive sign that the commercial vehicle segment will do well next quarter.
Q: What about two-wheelers? There has been this influx of EVs at the two-wheeler level, even though, it does not impact the ICE engines of four-wheelers as much, there is still that discrepancy there, but it’s a lot more in two-wheelers. How is that likely to pan out going forward? Do we see a tremendous shift out there, where does that mix stand?
A: If we take two-wheelers into consideration, I think it is only about 6% overall. When you take 6% I think there is a lot of room for it to grow. Apart from EVs, we also have CNG, which has become a choice for the customer and I believe a lot of customers would come into the CNG bandwagon too. So alternative fuels are important, apart from petrol, which is usually there, and they would play a very big role in terms of reducing our dependence on oil imports. So yes, there are certain other factors also to see whether, holistically in the life cycle, these products make sense environmentally, but they certainly will go on to reduce the fuel bills.
The EVs are quite nascent in our country. It’s yet to take off, but more and more of the scooter segment, we are seeing them shift over to the EV segment. We are also seeing some new entrance into the EV motorcycle segment with enough range to take care of the customer requirements, the EV is going to be a strong growth story in the future in India.
For more details, watch the accompanying video
Also Read | Uno Minda expects domestic auto growth momentum to continue in the second half
