Electric vehicle maker Kinetic Green recently said that slow economic growth coupled with dull consumer sentiment will be “extremely challenging” for the domestic automotive industry, which was already reeling under a sales slump even before the COVID 19 crisis.
At the same time, the company remains bullish on the electric vehicle (EV) segment in the long-term and expects demand to be strong. However, it is looking to push back some of its investment plans for the next one-two quarters to assess demand.
Automakers reported zero sales in April amid the coronavirus lockdown, while it dropped by a whopping 89 per cent in May. Though there was some recovery in June, sales were still lower on a year-on-year basis.
“The Indian automotive sector was already struggling in the previous fiscal before the COVID-19 crisis. It saw an overall de-growth of nearly 18 per cent during 2019. This situation has further worsened due tKo the pandemic, and the resultant lockdown and its impact on the economy.
“The coming year will be extremely challenging for the Indian automotive sector on account of slow economic growth and dull consumer sentiment,” Sulajja Firodia Motwani, founder and CEO, Kinetic Green, told in an interaction.
She said demand is returning, though slowly, post-lockdown and automakers across segments have reported improved performance in June compared to May.
“We are hopeful that the sector will recover in the fourth quarter of FY20-21. We hope that festival season will bring cheer to customers and manufacturers, as hopefully COVID situation will also be under control not only in India, but globally, by then,” Motwani said.
Segments such as motorcycles, tractors and utility vehicles, which have a higher skew of rural sales, are expected to see a faster recovery, she said.
Urban centres are facing the brunt of extended lockdowns, job losses and poor customer sentiment, she added.
According to her, the demand for EVs will be strong in the medium-to-long term amid factors such as health, pollution and the environment coupled with lower operating costs.
Besides, demand for passenger three-wheelers is likely to be lower due to travel restrictions in urban centres, and non-operation of mass transit like Metro and trains, which typically require three-wheelers for the last-mile connectivity.
“However, I expect a strong increase in demand for three-wheelers cargo, and especially for the electric three-wheelers due to higher demand in e-commerce segment.
“We have introduced special electric three-wheelers for cargo operations for such customers,” she added.
Remaining bullish on the adoption of EVs, she said, “In the short term, we expect there will be an impact on our core business which is shared mobility. So in order to avoid this impact, we brought a new range of products which are complementing our business of electric vehicles.”
These offerings include e-fogger and e-sprayer range for disinfecting outdoor areas and a portable UV sanitiser for indoor use.
“These new offerings are addition to our core business but are more relevant in the current social context. We are currently focussing on cost reduction, cash generation and focussing on the newly introduced model range.
“We will push back some of our other investment plans for the next 1-2 quarters so we can monitor the status of the economic and demand revival, although there is no change in our core business strategy and there is no diversification away from the electric vehicle business,” she said.
Kinetic Energy is focussing on ‘survive, revive and thrive’ strategy to generate and conserve cash, launch products which are exciting in the current environment and cut cost, Motwani stated.