Uncertainties seem to be increasing in the automotive industry in the last three years, observed BMW Group India president Vikram Pawah.
The pandemic hit the industry in 2020, and the next year saw a huge shortage of semiconductors. Now in 2022, even as COVID and chip crunch still continue, came geopolitical situations causing logistical nightmares. On top of all, there are shortages of containers and ships bringing overall restrictions on the supply chain, as per Mr. Pawah.
“Let’s look at the last three years,” he said. “In 2020, we were faced with a COVID crisis and the semiconductor shortage got added to it in 2021. In 2022, we still have COVID in many parts of the world and the chip crunch continues. On top of it, we have the geopolitical situation that is causing some logistical nightmares,’‘ he said.
Container shortage and ship shortage were creating a lot of uncertainties for the industry as the scenario impacted shipments and delivery scheduled, he added.
On the outlook he said, the automobile industry, in general, was in a ‘very dynamic environment’ hit by chip and ship shortage, geopolitical challenges, logistical issues and a phenomenal rise in the cost of raw materials. However, on a positive note, he said the demand after COVID was very robust.
Mr. Pawah explained, “The demand is quite robust for the premium segment and this is the after-effect of COVID. Customers used to be conservative earlier. After the pandemic, their expectations, mindset, aspirations and buying behaviours have changed and that is reflected in sales and booking numbers.’‘
Commenting on taxation, he said statistically India was probably one of the highest-taxed countries as far as the premium or luxury automotive industry was concerned.
“If you look at the component of the retail price of a luxury car today, 60% of that is taxes and duties. So, for us, it’s very difficult to make customers understand why something that costs €30,000 in Europe is costing €45,000 in India,’‘ he explained.
Some price gaps should remain, but why should the gaps be so huge, almost double, he asked.
``This has created a skew in the market dissuading customers away from adopting latest technology products in India,’‘ he stated
