Industry veteran Vinod Aggarwal isn’t just highly optimistic about India’s auto market — he has utmost faith that the sector will achieve its Rs 25 lakh crore target with ease, that too well before the proposed deadline of 2027-28.
Currently steering both the Society of Indian Automobile Manufacturers (SIAM) and Volvo Eicher Commercial Vehicles (VECV), Aggarwal made the statement following Minister of Road Transport and Highways Nitin Gadkari’s recent comments at the Vibrant Gujarat summit. In his speech, the Union minister had emphasised the Indian government’s Rs 25 lakh crore target for the automobile industry to secure the number one spot in the world.
This is a significant development, considering that in February 2023, the Centre had announced its aim to double India’s auto industry valuation to Rs 15 lakh crore by the end 2024.
Furthermore, the government now aims to achieve US$5 trillion (roughly Rs 370 lakh crore) in GDP — to become the world’s third-largest economy — by 2027-28. This target, however, is a departure from their earlier goal of hitting a GDP worth US$5 trillion by 2024-25. The Rs 25 lakh crore target for India’s auto industry is part of this target for 2027-28.
The estimates, however, differ from those taken by a few private rating agencies. Crisil, for instance, expects India to meet its US$ 5 trillion target by FY29, even if the nominal GDP growth maintains its current levels.
Key drivers of CV industry
Following a slowdown in the pandemic years, Aggarwal believes that the commercial vehicle (CV) industry is now well poised for steady growth. Infrastructure spending, India’s economic growth as well as replacement demand, he said, are the factors that will ensure the continued expansion of the field.
To drive home his point, Aggarwal highlighted that the sale of heavy-duty trucks spiked by 12 percent in the first nine months of FY24, although this growth wasn’t as strong as last year due to a high base effect. Secondly, light- and medium-duty trucks saw a marginal drop of around 3 percent, partially because of a plunge in the demand for CNG trucks caused by a rise in fuel prices. Buses, too, saw strong growth — despite low demand for heavy-duty buses, the segment witnessed 31 percent growth in the first nine months of FY24. In the same period, CV exports dropped by around 15 percent, continuing the decline it’s reported for the past few years.
Increasing market share
VECV has been consistently carving out a bigger market share for itself year-on-year due to superior products and better after-sales services, the top executive added. For instance, in the light- and medium-duty trucks segment, their market share rose from 31 percent last year to 34 percent in the first nine months of FY24. Similarly, in the heavy-duty trucks category, VECV secured a 9.1 percent market share in the same period, up from 8.5 percent the last financial year.
In light of these figures, Aggarwal is confident that VECV will keep making further inroads in the industry, especially with regard to heavy-duty trucks where there’s highest potential.
Expanding demand for e-buses
With state transport undertakings procuring electric buses through FAME-II subsidies, Aggarwal has noted the increasing adoption of electric buses in public transport. More tenders are expected from Convergence Energy Services Limited (CESL), even though earlier concerns around payment security mechanisms are being addressed.
Besides state transport undertakings, there’s also been some traction with private customers for intra-city movement, he concluded.