Won't raise investment in diesel auto parts: Mico Bosch

Moneycontro Bureau

The recent petrol price hike may fuel diesel cars sales, but auto part makers are hesitant to invest in part and products for commercial and consumer diesel vehicles citing lack of clarity in government policy. At the ongoing Citi investor meet, automotove component major Mico Bosch's CEO VK Vishwanathan told investors that despite tremendous potential, auto part suppliers will wait for a definitive action on diesel prices before increasing their spendings on diesel auto parts.

Vishwanathan revealed that one of the most remarkable developments in passenger car transport in recent years was the rapid gain of market shares of diesel vehicles in Europe, and that's because of the fuel economy. In some European countries diesel consumption in passenger car transport is higher than gasoline consumption. But in India, the picture has been quite the opposite. Though petrol prices have recently been market-linked, diesel prices have been kept artifically low and the resultant shift in preference for diesel-run cars cannot be called a trend, just yet.

Auto sector outlook

Speaking about the near-term outlook for the auto industry, Vishwanath said the slowdown will continue but a pick-up can be expected during the second half when festivals begin in India.  "We had a great first half in 2011, but the industry barely grew in the July-December period. Rising inflation, hardening interest rates, increasing fuel prices and a prolonged strike at Maruti's Manesar plant were taking a serious toll," he said. The following quarter (January-March 2012) has been a mixed bag. While commercial vehicle segment continued to suffer, the passenger car segment picked up because of the excise levy announced in the Budget which was to be effective from April 2012. The first two months of the new fiscal has been dull once again, which is how it will remain until festivals herald buying of new cars.

However, sales volumes failed to pick up last year even though several OEMs launched new models, offered aggressive discounts and promotional schemes to lure customers.

The Indian passenger vehicle industry had a brilliant run in the last five years riding on strong economic growth, rising disposable incomes and fairly low penetration levels. According to an ICRA report, the industry’s volumes grew at 16.3% CAGR during 2007-11 period, with last two years witnessing particularly strong growth.

Roadmap for Mico Bosch

The company, which spends a significant portion of its turover in R&D, will look at innovations in safety aspect of passenger cars in India. "Gone are the days of driving at 50km/hour. The standard speed in the coming years will over 100 km/hour," Vishwanath said justifying the need to raise safety standards in cars. Currently safety measures are limited to airbags and a few other things.

Set up originally as Motor India Company Ltd (MICO) in 1953, Bosch has 12 manufacturing sites and four development centres in Bangalore, Nashik in Maharashtra, Jaipur in Rajasthan and Panjim in Goa.

Jhini Sinha Phira
jhini.phira@network18online.com