Tata Motors expects the automobile industry to turn around in the second half of financial year 2020-21.
This would be after the switch from BS-IV to BS-VI emisison rules is complete and the central government’s effort to turn around the economy starts paying off, said Guenter Butschek, managing director.
Tata, the country's largest in the segment by sales revenue, says it will begin introduction of its BS-VI range with passenger vehicles (PVs), starting this month. There will be four global unveilings, 14 commercial and 12 PV displays at the coming Auto Expo 2020, at Greater Noida.
“We are going to get back to a growth path. Am being cautiously optimistic; the second half of FY21 should be realistic,” Butschek, leading Tata Motors India operations for four years, told reporters.
He says the PV market could see growth earlier, if the current trend of monthly improvement in retail sales continues. However, a real breakthrough in volumes will be in the festive season, he adds.
Butschek remains cautious on the commercial vehicle (CV) segment, the fortunes of which are linked to the economy and regulatory changes. He says the segment has “yet to swallow” the impact of 2018's axle load notifications and needs intervention like a scrappage policy to revert to a growth path.
The revised axle norms (July 2018) increased the freight capacity of operational trucks by 20-25 per cent. It impacted inter-state movement of trucks, the bulk of primary freight and where overloading was limited. Butschek says if these norms had taken effect in 2021 and a scrappage scheme from April 1, the CV industry wouldn’t have suffered so much, as each would have compensated for the other.
His concern on CVs is in the backdrop of a slowing economy and overall slowdown in consumption, prompting fleet operators to put off buying of new trucks or replacing of existing ones, despite deep discounts.
The crucial transition to BS-VI, from April 1, is another worry. It is expected to disrupt the CV industry in a big way, given the higher pricing of vehicles with the new emission technology. Unlike PVs, the transition in CVs will come with multiple variants, trim levels and body types. This makes the exercise quite complex.
The transition is an opportunity to “recalibrate the transaction price” (sale price) of CVs, said Butschek, alluding to the practice of sale at deep discounts. While high discounts to clear old stock is fine, it cannot become routine and be done to buy market share, he added. “It’s retail that should trigger wholesale and wholesale should trigger production. Otherwise, we will have a discrepancy between demand and supply.”
Asked if Tata was seeing transporters buy their BS-IV trucks to beat the coming price hike of 10-25 per cent in BS-VI ones, he said pre-buying had started but not by as much as one expected at the beginning (April 2019) of this financial year. Truck sales in India have been skidding since June.