Bajaj Auto Chairman Rahul Bajaj criticised the Centre’s lack of effort towards arresting falling demand and boosting private investments. He was speaking to shareholders at the company's 12th Annual General Meeting.
The 81 year-old billionaire businessman did not mince words while highlighting the challenges faced by the auto industry, which recorded its eight consecutive months of sales decline.
“The government may or may not be saying this but there are clear cut markings from the International Monetary Fund (IMF) and World Bank, which shows a decrease in growth in the last three-to-four years. Like any government they would like to show a happy face, but reality is reality,” Bajaj said.
World Bank expects India’s economy to grow 7.5 percent this fiscal, however India’s central bank is not so optimistic. The Reserve Bank of India (RBI) revised India’s FY20 GDP forecast downwards from 7.2 percent in its April policy to seven percent.
During the April-June quarter (Q1), the automobile industry saw a 12.3 percent drop to six million units. Passenger vehicle segment comprising cars, SUVs and vans reported the highest fall at 18.4 percent, followed by commercial vehicles, which fell 16.6 percent.
“There is no demand and no private investment, so where will growth come from? It doesn’t fall from heavens. The auto industry is going through a very difficult period. Cars, commercial vehicles and two-wheelers are going through a rough patch,” Bajaj added.
Several auto makers like Maruti Suzuki, Tata Motors, Honda Cars India, Mahindra & Mahindra, Renault-Nissan, Skoda and Ashok Leyland undertook production holidays to cut back on output. Despite this, inventory levels at warehouses and with dealers remain high especially for two-wheelers and commercial vehicles.
“Two-wheelers are lying with dealers for 65 days against the normal 25-30 days. This is the case with commercial vehicle dealers too who are holding stocks for 55-60 days. Discounting has made matter even worse for both segments,” said a Mumbai-based analyst.
According to data shared by the Society of Indian Automobile Manufacturers (SIAM), two-wheelers recorded a fall of nearly 12 percent in sales to 5.01 million units during Q1 as compared to 5.67 million units sold in the same period last year. Commercial vehicles recorded a fall of nearly 10 percent in sales during the same period to 2.08 lakh.