Honda Motorcycle and Scooter India Pvt. Ltd. said the country’s auto sector, which is in the midst of its worst slowdown in 22 years, isn’t seeing any signs of revival.
“It’s difficult to find a positive sign,” Minoru Kato, president and chief executive officer of India’s second-largest two-wheeler maker, told BloombergQuint during the launch of Honda's first BS-VI scooter, the Activa 125, in Delhi on Wednesday. “It’s not just the auto industry, the fundamentals of the Indian economy have weakened.”
This year and the next, Kato said, will be challenging for automakers amid transition to Bharat Stage VI emission norms.
YS Guleria, senior vice president (sales and marketing) at HMSI, agreed. He said the market has so far only seen the impact of rising insurance premiums and other factors. “The overall impact of BS-VI will be felt next year, adding to the auto slowdown.”
The comments from HMSI came in the backdrop of auto sales declining since the Diwali festival last year, with falling volumes forcing companies to lay off contract workers and dealerships to shut showrooms.
The automobile sector is key to Asia’s third-largest economy, employing millions of people directly or indirectly and contributing over 7 percent to the nation’s gross domestic product, Bloomberg reported citing McKinsey & Co.
“When all the (vehicle) models will be BS-VI, and the customer will have no choice, then there may be a slowdown as vehicles will come at a higher price point,” Guleria said.
The Activa 125 BS-VI was launched at a starting price of Rs 67,490. HMSI expects average prices of two-wheelers to rise 10-15 percent due to the stricter emission norms.
Watch the entire conversation here:
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