- There is no electric four-wheeler for private buyers for next 2 years.
- No synergy among different wings of govt to stagger all the new norms.
- Auto sector has been having downturns every 5 yrs.
How are you feeling about the downturn in the auto sector?
I am certainly much more confident after the meeting and then the Prime Minister’s statement, the day before yesterday in his interview with
The Economic Times
. But downturns are not something which we should be surprised about.
It is part of business.
Part of business. We have had a downturn in 2008-09. We had a downturn in 2013-14 and again in 2018-19.
As bad as this one?
No not as bad. It was not as bad for the first three quarters of the year where the downturn in the first three quarters was exactly like the downturn in the previous two downturns. But this time, the June quarter and July are very different and this has happened because a lot of costs which impact the ownership of a vehicle by a customer have come to play and these include the impact of the safety regulation, for ABS and airbags and side body impact. They relate to the cost of changing over from BS-IV to BS-VI where there is always a problem as to how to manage the inventory of both types of vehicles. Its impact on the insurance part, the impact on the recent increases in road taxes and one of the points which I do not mind disclosing is that there is no coordination between different agencies of government to see whether all these changes should not be staggered, so that all the impact do not come together.
All the things can all be done but only if they were done in a manner where the cost was spread out, would have helped.
You are saying there is too much disruption at the same time.
The total cost of impact is very high.
What is the total cost impact? Have you done any analysis?
I have got the figures. I can give you the figures, but…
On an average how much more expensive is it to own a car in India?
In last one year, small cars have become 10-12% more expensive. The bigger cars have gone up by larger amount because the road tax on the bigger cars is higher.
No, it is about 12-13% and the bulk of this increase goes for these extras which are being introduced.
If it is going to cost a almost 10-12% more to own a car, I can always book an Uber and an Ola. How can you try and find a solution because you are also seeing this trend among the millennials that they do not want to own a car, they do not want to own a house!
No, it is something which has to have an effect this year because the change has come when the downturn was happening. It is just unfortunate that the timing of all these events has coincided with the periodical downturn.
With the IL&FS, NBFCs, liquidity crisis…
Every five years, there is a downturn. It happened in 2008-09, 2013-14 and 2018-19. It is a five year cycle which seems to have been happening in the last ten years. All these extra costs and changes in regulation and rules have unfortunately come in the year when the downturn was happening.
But do you blame Uber and Ola?
No, no, not at all.
You do not think that is also a reason?
Not at all. They are not the reason.
Do you use Uber and Ola?
I do not use it because I have a car. The company gives me a car to use, so I do not have to use an Uber, Ola. But I think it is a very economically sound proposition for a lot of customers to use the Ubers and Olas.
Coming to electric vehicles, I was there at the annual SIAM conference in 2016 when Nitin Gadkari very famously said petrol, diesel ka band baja denge. This is the government that talks a lot about electric vehicles. As top boss of India’s largest car maker, when do you see electric vehicles becoming a reality the way it has been talked about?
It depends what you mean by popular reality, in what numbers do you expect this number to reach so that this is considered popular.
Let us look at the government’s own initiatives, the targets that they have.
The government has announced no targets for four-wheelers.
That is for two-wheelers, not for four wheelers. On four-wheelers, the government is having a wait and watch policy. I think people will understand that I do not have EV coming up for private customers in the next year or the year after that.
So for two years, we will not see an electric vehicle, passenger vehicle…
For the private customer. Small electric vehicle for the private customer. You will see some for the aggregators if they are willing to buy. The bulk market is the private buyer. For him there is no electric vehicle. For the small EVs, there is nothing.
Will you completely phase out diesel cars?
The 1.3-litre diesel car will get phased out but it does not mean that Brezza is going to get phased out because there is a feeling that diesel car phasing out means Brezza. We will have a petrol Brezza in the market before the end of this financial year. Customers can buy the diesel Brezza or later buy the petrol Brezza because the car will be available and therefore there is no fear about spare parts and maintenance and service and all that. We have also extended the warranty on the diesel Brezza just to reassure the customers that there is no issue there.