Remain cautiously optimistic next year: Wheels India MD Srivats Ram

CHENNAI: Just when the recovery phase of the pandemic seemed to have kicked off in February, sparking positive sentiments among businesses, the Ukraine war played the spoilsport. Health gaining priority due to COVID-19 and a shrunk demand have led Wheels India MD Srivats Ram to be “cautiously optimistic” about next year.

“The overall mood in February prior to Ukraine crisis was positive. That took a beating after the crisis. It is in the recovery phase now. I am cautiously optimistic about next year. While Indian economy is in a much better position, there could a rub-off effect of the global slowdown on India. However, there are sectors which do not follow the economic pattern of the country,” he sought to point out.

Making a case for the passenger cars segment, Srivats said the pent-up demand was two-fold which would play out next year. Customers were either keen to finalise their purchases or on the look out to upgrade their vehicles to say an SUV, he said, adding a sizeable chunk of the consumers, estimated to be 200 million, were keen to buy products. But, there existed a fear of cancelled orders given the prospect of multiple bookings taking place. “Our passenger vehicle customers are quite optimistic about the prospects for the next year and they believe there could be close to double digit growth,” he added.

Srivats also gave an overview of the commercial vehicles sector, which was supposed to have seen a ‘hockey stick’ kind of recovery but the government spend on infra had been less this year. “However, bus tenders have started and should continue into next year. The year before election is usually one when there is a lot of infra spend and bus buying. So, CV should see an uptick next year,” he said.

While the overseas demand of the industrial segment is expected to spill over into next year, he cautioned “this will also depend on the length of the recession-whether it will be a short one or will run through for a longer period. In the US, high inflation and slip up in white collar jobs have caused a negative impact. Retail has dropped and there is inventory correction taking place.” On the prospects of the electric vehicles business, he said India needs to look at a change in mix in the power grid. Though it is skewed towards coal-based power, the government has ambitious plans of increasing renewable power.

Emphasising the importance of tapping alternate sources of power, he said, “the issues relating to range and charging have to be sorted out for long distance car travellers to look at EVs. So far, I would say the EV kick-off has been quite successful. It is just the beginning of a journey.”

Srivats also talked about inflation, which he said, is “not just a number” and relatively manageable in India. “However, the levels in Europe and the US are quite a shock to the system. I am confident we will be beyond inflation related issues (interest hikes) next year. If money is harder to get, we have to prioritise the projects as against going ahead with all of them,” he added.