Second Wave of COVID-19 Hits India Commercial Vehicle Market

News: Indian Subcontinent

2021-10-03

Second Wave of COVID-19 Hits India Commercial Vehicle Market

Motorindia-May_2021Download
Aditya Kondejkar

The second wave of COVID-19 has put the brakes on a rebound in India’s commercial vehicle market, reports Aditya Kondejkar, Power Systems Research Analyst for South Asia Operations, in the May 2021 issue of Motorindia magazine.

Kondejkar notes that the second wave of the pandemic has caused shortages of semiconductors and steel as well as weaker consumer demand. These forces have pushed commercial vehicle production down nearly 60% month-on-month (MoM) in April.

Kondejkar points out that the India CV market witnessed a strong performance in 2018 with more than 1.13 million
units produced, owing in large part to GST implementation and replacement demand. In 2019, however, the Indian CV market began shrinking as it faced headwinds from revised axle load norms, vehicle over-capacity, BS-VI transition, and a liquidity crunch.

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2021-09-26

India EV Segment Gains Traction

Aditya Kondejkar

The EV segment in India is continuing to grow with additional government support. In July of this year, the government partially modified the Faster Adoption and Manufacturing of Electric Vehicles (FAME) in India Phase II. It has included an additional demand incentive for electric two-wheelers to ₹15,000 per KWh from an earlier uniform subsidy of ₹10,000 per KWh for all EVs, including plug-in hybrids and strong hybrids except buses.  

This decision will increase the subsidy for such vehicles by 50% under the FAME II scheme and be a game-changer in adopting EVs.

Such moves from the government will boost faster adoption of EVs. Furthermore, with this kind of solid support, OEMs will also take a step forward to accelerate the mass adoption of EV.

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2021-08-22

PM Launches Vehicle Scrappage Policy

Aditya Kondejkar

Vehicles will not just be scrapped by their age, but also if they are found to be unfit in automated testing. The vehicle scrappage policy will bring in investments of around INR 10,000 crore to set up 450-500 Automated Testing Stations (ATS) and 60-70 Registered Vehicle Scrapping Facilities (RVSF) across the country.

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PSR Analysis: Under the Voluntary Vehicle-Fleet Modernization program (VVMP), the government plans to set up between 450-500 automated vehicle fitness testing stations across India on a public-private partnership (PPP) basis involving private firms and state governments. A total of 60-70 vehicle scrapping centers will also be built; these stations will be situated no further than 150-200 kilometers away from any location in India. A total of seven agencies – including Tata Motors – have signed a Memorandum of Understanding (MoU) with the government today for this project. Tata Motors’ vehicle scrapping center will be set up in Gujarat, will scrap both passenger and commercial vehicles and will have the capacity to recycle up to 36,000 vehicles a year.

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2021-07-27

Second FAME II Incentives May Spur EV Demand

Aditya Kondejkar

The amendments to the FAME-II electric vehicle policy were rolled out in the last month and manufacturers have lauded the efforts in adopting EV mobility in the country.

Source: Financial Express. Read The Article  

The government partially modified the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II. Further, it has included an additional demand incentive for electric two-wheelers to ₹15,000 per KWh from an earlier uniform subsidy of ₹10,000 per KWh for all EVs, including plug-in hybrids and strong hybrids except buses.

 This decision will increase subsidies for such vehicles by 50% under the FAME II scheme and be a game-changer in adopting EVs.

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2021-05-24

Mahindra To Set Up New Plant for Farm Equipment

Aditya Kondejkar

Mahindra and Mahindra Ltd (M&M), market leader in the Indian tractor industry, is betting on farm equipment because of increasing demand. The decision is greatly influenced by the healthy agricultural output, record sales for tractors and reverse migration since last year.

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PSR Analysis: The company is trying to enter the untapped farm mechanization segment in the country. According to Mr. Hemant Sikka (President Farm Equipment Sector Mahindra) this market has very high potential as India has only 1% share of the global farm equipment market vs. 10% of the global tractor market. 

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2021-04-25

Uralmash Sets Deal of US$ 322 Million with India

Uralmash (a subsidiary of UZTM-Kartex) has signed its largest deal in the last 30 years. UZTM-Kartex and Coal India Ltd Binay Dayal have signed a contract totaling US$ 322 million for walking excavators, according to the company.

Under the contract, the Uralmash plant will deliver five electric-powered walking excavators of increased power – ESH24.95 and will perform assembly of the equipment on the customer’s site. The OEM also will service machines for 11 years.

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PSR Analysis: ESH24.95 is an electric powered excavator with 24 cubic meter bucket and 95-meter jib. UZTM Kartex also makes diesel machines. Recently it has launched excavator with Cummins QSK-91 engine. PSR

Maxim Sakov is Market Consultant – Russia Operations for Power Systems Research

India Government Announces Scrappage Policy

Aditya Kondejkar

The central government in mid-April announced its long-awaited vehicle scrappage policy. Under the new policy, in case of failure to get a fitness certificate, commercial vehicles will be de-registered after 15 years. Private vehicles will be de-registered after 20 years if found unfit or in case of a failure to renew registration certificates

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There are approximately 50 lakh vehicles in India that are older than 20 years, approximately 35 lakh vehicles older than 15 years, and approximately 15 lakh older than 15 years without renewed fitness certificate.

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2021-03-20

Semiconductor Shortage Restricts Growth of Indian Auto Industry

Aditya Kondejkar

As the industry is coming out from the COVID impact, its growth is hurt by a shortage of semiconductors. Many OEMs have revised the production plans downward due to this shortage. We anticipate the shortage of semiconductors will exist for the next 4-5 months. Though it will hamper monthly production, it will have only a moderate impact on the total year’s production. But If the chip shortage lasts, production cuts could reduce the inventory of vehicles for sale in India and overseas markets.

The issue started in the Q2 2020. Due to COVID-19, auto OEMs worldwide drastically reduced their production and component orders. Concurrently, chipmakers were improving the supply chain, which had been disrupted by COVID-19. They witnessed a spurt in orders from electronics companies for items such as phones, laptops, gaming console makers and witnessed a spike in sales volume during the pandemic caused by changing work and school patterns.

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2021-02-23

Union Budget 2021 Misses Mark for Autos

Aditya Kondejkar

The Union Budget 2021 is very important since it comes during an unprecedented pandemic. The most significant pain points of the economy are the lack of demand and liquidity. The shrinking market’s impact and the weak demand is evident after the Economic Survey said that the country would experience a current account surplus for the first time in 17 years.

The automotive industry is the key stakeholder of the country’s economy. It suffered extensive sluggishness in the past 10-12 quarters after introducing GST, the new safety norms, insurance regulations, axle, and emission norms. These led to a hefty increase in purchase costs. The industry was waiting for direct announcements to reduce purchase cost and improve customer sentiment

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2021-02-22

Truck News: Ask The Expert

Chris Fisher
Chris Fisher

What changes do you see in the PSR Truck Production Index in the fourth quarter compared to the third quarter of 2020?

Overall, we are seeing stronger momentum for commercial truck orders and sales which bode well for production in Q1 2021.

Supply chain issues will impact short term production as companies are still having difficulty with staffing numbers and various virus protocols that disrupt production. These problems are expected to continue throughout at least the first half of the year.

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