OEMs currently have a capex of around Rs 25,000 – 30,000 crore per year in terms of enhancing their capacity for model launches and upgradation of existing models, according to BWA.
Recently, the auto sector started showing gradual recovery signs after facing disruptions due to the lockdown, which is largely attributed to pent up demand which materialised particularly during the festival season, the report said.
However, what’s much more worrisome is that the investments have taken a backseat, that too at a time when the government is increasingly supporting the adoption of EVs through various policy initiatives, with the vision of EVs constituting 30 per cent of the overall vehicles on road in India by 2030.
The total EV sales, across segments (two-wheelers, passengers vehicles and buses) stood at 1.56 lakh units last fiscal as compared to 1.30 lakh EVs sold in 2018-19, as per the report.
According to BWA, to boost the adoption and manufacturing of EVs by creating manufacturing capacities of a global scale and competitiveness, the firms’ capex requirements are crucial at the initial stage.
Apart from multiple factors such as price, charging infrastructure, mass acceptability and evolving technology, setting-up manufacturing units for EVs is a significant requirement for the EV market, it said.
In line with rising customer demand, many auto manufacturing companies have already increased their capital expenditure to widen the scope of proposed EV businesses. However, the current crisis situation might lead them to rethink their proposed capital expenditure, said the report.
As per BWA, OEMs will have to incur capex to the tune of around Rs 3.5 lakh crore exclusively for EVs in the next five to seven years to meet the government’s vision.
However, it seems unlikely that OEMs will be able to incur such significant capex as the business environment has been badly hit due to the pandemic, it said.
Vehicle sales were already at their decadal low when the pandemic hit, and the sector is one of the worst hit during the pandemic as well.
The cash accruals of OEMs were badly impacted during FY20 and FY21, and will take more time to return to pre-COVID levels, it said, adding that these two years of continuous slowdown and the subsequent capex already incurred to meet the BS-VI emission norms will restrict firms from committing significant capex towards EVs.
However, BWA expects larger OEMs to take the inorganic growth path and acquire smaller, but specialised, players in the EV space, especially in the relatively lower value two-wheeler space, considering that this segment accounts for 80 per cent of the domestic auto sales.
The report also said that given the expectation of an about 10 per cent contraction in the domestic economy in full year FY21, demand for EVs is also likely to slow down.
Pitching for more government support, BWA said the Centre needs to come up with a scheme similar to the Technology Upgradation Fund Scheme (TUFS) in the textile sector to help OEMs upgrade towards EV technology.
The amended TUFS envisages interest reimbursement on the loans taken for technology upgradation and provides one-time capital investment subsidy of 10 to 15 per cent on eligible machines for different segments with a subsidy cap.
Such a subsidy, if proposed for the automobile sector, will take away some burden from the OEMs and help them achieve the EV vision, it added.
Hyundai rides high on SUV wave, bets on innovation to gain market share
High waiting periods, on the other hand, seems to be a happy headache for the Koreans. With initiatives upfront like the democratization of turbo engines and the introduction of iMT (clutch-less manual), TOI Auto got into a conversation with Tarun Garg, Director of Sales and Marketing, Hyundai Motor India to understand how exactly the automaker dodged the Covid crisis. Along those lines, Garg also shed light on the future of electrification in Hyundai, the strategy for 2021 and upcoming launches.
Ending 2020 on a high note
Hyundai Motor India’s performance in 2020 alone became the key take away from the conversation. Just before the lockdown in India, the automaker had already rolled out the Hyundai Aura and Creta. Even after the pandemic hit the nation with full force, Hyundai became one of the first automakers to resume production after a brief shutdown. During the lockdown the period, the automaker rolled out the Hyundai Venue iMT, Venue Sport and the Tucson to expand its line-up and bank on the high SUV demand. In late 2020, the 3rd-gen Hyundai i20 made its way to the market to cater to the demand in the highly competitive hot hatch segment.
By the end of CY2020, Hyundai emerged as the top SUV maker selling a little over 180,000 units capturing around 25% of the SUV market. While Creta became the best-selling SUV in 2020, Venue also contributed a good share to the overall sales.
“Hyundai banked on the current SUV trend as the segment held a market share of 29% and became the number one SUV maker in the country. Creta also became the bestselling SUV in the country again,” said Garg.
Keeping up with the evolving customers’ demand
During the conversation, Garg emphasized on the fact that customers need to be pampered with new features, new tech and versatile engine and transmissions. According to the data presented, Hyundai Creta holds an upper hand in the market due to the number of engines offered (turbo-petrol, petrol and diesel), transmissions (IVT, AMT, MT and DCT). The creature comforts offered are all a bonus. For the Hyundai i20, around 30% of the bookings are for variants with a sunroof. Connected car tech, air purifier, wireless charger and ventilated seats have also resulted in increased demand.
12:31Hyundai Creta review: Decoding diesel demand
The way Hyundai managed to offer most of the trendy features and add-ons at quite on aggressive price tag worked out pretty well for them and it reflected in the CY2020 sales figures especially in H2 and the decent increase in market share. Hyundai currently has a market share of 17.4% against 17.3% in 2019 and 16.3% in 2018.
“Our decision to offer the customers with so many engines, latest tech, and new features combined with other factors made Hyundai gain market share. Customers are much more evolved now and they’re looking at new tech and they want all this at a very reasonable price. Features like air purifier, wireless charger, connected features, ventilated seats are being appreciated now,” added Garg.
Turbo-engine democratization and the iMT demand
Hyundai has banked on the demand for the turbo engines as now customers look for performance-oriented offerings that offer a good fuel-efficiency at the same. According to the data presented, Hyundai did observe a huge adoption rate for turbo variants in 2020 and introduction of a turbo variant in the entry-level segment (Hyundai Grand i10 Nios), compact sedan segment (Hyundai Aura), hot hatch segment (Hyundai i20) and the SUV segment (Hyundai Venue and Creta) did boost the Korean automaker’s sales in the market up to some extent.
“We introduced our first turbo variant when we entered the sub-4m SUV market with the Venue. And now more than 30% of our customers opt for a turbo variant and the adoption rate is very encouraging too. Now we have a turbo variant across all the segments.”
The iMT gearbox is still a rarity in the market and is currently being offered in just three cars in India out of which two belong to Hyundai- Venue and i20. The Hyundai Venue was the first car in India to offer the iMT and the clutch-less transmission is a hit.
04:27Hyundai Venue iMT first drive review
“Customers don’t purchase an auto variant because of the pricing, fuel efficiency and some choose to stick to the manual transmission because of the feel. The iMT was introduced to bring the two-pedal tech to India to make the driving experience much more convenient and it only costs an extra Rs 22,000 compared to the MT variant. The iMT also helped Hyundai boost the sales of the Venue,” added Garg.
2021 outlook: Upcoming models and electrification
Hyundai currently has the Kona EV in its electric portfolio and the automaker is already working on boosting its EV offerings. While Garg was quite tight-lipped about the future projects, he did confirm that the Indian market would be seeing the first mass-market EV from Hyundai in the next 3 years. Until then the drive towards cleaner mobility and achieving technology leadership remain to be the key agenda for the automaker.
When asked about the 7-seater version of the Hyundai Creta, Garg said that Creta is a strong brand with 5 lakh units already sold, and the automaker considers opportunities in all segments.
“Creta is a strong brand and it has done very well in the market. I will refrain from giving any guidance on the future products but we as Hyundai have always looked for opportunities in almost all segments and we are always to open to expanding. We have done it before with Creta in the C-SUV segment, Santro in the tall-boy segment, Getz in the hot hatch segment and we’ll continue to look for opportunities in new segments,” said Garg diplomatically.
Any challenges yet?
Hyundai cars, precisely after the festive season, have been coming with an enormous waiting period. But according to the automaker, all’s well in that domain. Hyundai won’t be going ahead with an increase in production and it already has a reliable network but Garg did add that the Korean automaker is making changes in its production and supply chain to cut down the current waiting periods.
When asked about the semi-conductor shortage that has slowed the global auto industry down, Hyundai Motor India seems to have barely been touched by the crisis. Again, Garg positively said that their supply chain is quite comprehensive and all’s well at the automaker’s camp.
“Our supply chain has been very proactive and so far, the situation has been good and the demand is being met seamlessly.”
Transport Minister Nitin Gadkari okays “Green Tax” for older, polluting vehicles
According to the proposal, transport vehicles older than eight years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 % of road tax, while personal vehicles to be charged Green Tax at the time of renewal of registration certification after 15 years.
The proposal will now go to the states for consultation before it is formally notified.
“We are empowering the state government to levy a higher road tax for older, polluting vehicles. The green tax will be part of the road tax collected by the government,” a senior government official told ET about the development.
These are draft guidelines which will go for stakeholders consultation, and will be implemented after approval from State governments, the official added.
A higher green tax, to the tune of 50% of road tax for vehicles being registered in highly polluted cities will be levied, the Centre has proposed.
Vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol,LPG, besides those used in farming, such as tractors, harvestors, tillers, will be exempt from such tax.
“It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet , contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less that 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles,” the statement from the ministry of road transport and highways said.
Gadkari also approved the policy of deregistration and scrapping of vehicles owned by government department and PSUs, which are above 15 years in age. It is to be notified, and will come into effect from 1st April, 2022.
Revenue collected from the Green Tax will be kept in a separate account and used for tackling pollution, and for States to set up state-of-art facilities for emission monitoring, the ministry has proposed.
Evergrande’s electric car unit gets funding to compete with Tesla, Nio in China
Evergrande Group Chairman Xu Jiayin attends Evergrande New Energy Auto Global Strategic Partners Summit on November 12, 2019 in Guangzhou, Guangdong Province of China.
VCG | Visual China Group | Getty Images
GUANGZHOU, China — Shares of the electric vehicle unit of Chinese property giant Evergrande surged as much as 67% on Monday after the company raised significant funding through a new share sale.
China Evergrande New Energy Vehicle Group surged to an all-time-high of 50 Hong Kong dollars before paring some of those gains. Shares of the company closed at 45.35 Hong Kong dollars.
The stock rocketed after the Chinese electric car company issued 952.38 million shares to six investors at a price of $27.30 Hong Kong dollars and raised net proceeds of 26 billion Hong Kong dollars ($3.35 billion).
Last year, Evergrande showed off six new electric vehicles under a brand called Hengchi, with the hope of starting production this year. The company has not sold a single car yet.
In September, the company raised around 4 billion Hong Kong dollars through the sale of shares to investors including Chinese internet giant Tencent and ride-hailing service Didi.
China Evergrande New Energy Vehicle Group is also preparing for a listing on Shanghai’s Nasdaq-style Science and Technology Innovation Board, or the Star Market.
China’s electric car companies have been aggressively raising capital to ramp up production and take a lead in the competitive market.
This month, BYD — the Chinese electric carmaker backed by American billionaire Warren Buffett — said it raised 29.9 billion Hong Kong dollars through the issuance of new shares.
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