Except for tractors, all market segments have shown demand growth: Bosch MD

India has solidified its position as the world’s third-largest auto market, overcoming challenges both before and during the Covid era. Semiconductor shortages and major disruptions in the supply chain have eased. While the possibility of another semiconductor flare-up cannot be ruled out, the situation has been managed well, partly owing to the global economic performance and increased demand in other regions. On the positive side, there is a notable improvement in semiconductor supply. The moderate increase in raw material costs and electronic components still persists to some extent. But despite these lingering issues, the overall outlook for supply and logistics challenges appear to be easing.

The momentum in the Indian market has been impressive over the past six months to a year post-Covid. Passenger cars have shown significant growth, and most segments, excluding tractors and specific two-wheelers, are on an upward trajectory. Heavy commercial vehicles, for instance, have witnessed increased demand.

The tractor segment’s performance is intricately tied to the monsoon and farmers’ financial capacity. Currently, both the tractor and rural two-wheeler segments are relatively sluggish. However, two-wheelers have displayed growth stability in recent months, and the festive period is expected to provide a further boost. Tractor demand is expected to pick up in the last quarter, with improved rainfall and cash flows in the agricultural sector.

While some challenges persist, the market seems poised for robust growth in the upcoming quarters. Uncertainties due to global factors, such as events in Ukraine, Russia, and West Asia, cannot be ruled out completely but nevertheless, the steady and strong performance of the Indian economy is a positive indicator for the auto market’s future prospects.

For the upcoming quarter, we do not anticipate any slowdown. Festive demand is robust, and we expect the positive trend to persist in the subsequent quarter as well. However, providing an outlook beyond that is difficult, especially with the upcoming elections that might bring about changes. As of now, our focus is on the next two quarters, and we remain optimistic about experiencing substantial growth during this period.

Karin: Yes, we have an exceptional item involving the sale of our business, specifically related to the reorganisation of our mobility solution business. Initially, this was conceived as a project house here in India, but it evolved into a global platform. The decision to transact was driven by our desire to navigate this global platform and solutions business through a neutral e-commerce marketplace that will ensure flexibility and ease in global operations (and thus the divestment).

Mudlapur: Adding to this, the business prospects revealed that the most significant opportunities lie in the well-established developed markets. Additionally, the venture required substantial capital infusion from other parent entities to thrive in these markets. Given that our focus is primarily on the Indian market, and we don’t handle operations outside India, we deemed it prudent to allow the parent entity to expand the business globally.

The electric vehicle (EV) market is in its infancy, akin to stage zero on a scale of 0 to 10 in India, with the global scale ranging from 0 to 3, depending on the country. So, it’s at a very nascent stage worldwide, and as we progress, many aspects will evolve and adapt. In the Indian context, one of the original equipment manufacturers (OEMs) is leading the charge, producing a substantial number of vehicles.

What we observe is a significant surge in engineering activities involving OEMs, Tier-1 suppliers, and various players. Our commitment to substantial investments in electric vehicle development platforms, corporate and technology developments remains, while catering to several OEMs.

The global electric vehicle uptake might be experiencing a slowdown, but the Indian market, being so early in its development, has not yet felt the impact. However, at Bosch, we are gearing up and offering technologies to all OEMs as we identify promising opportunities in electric vehicles, particularly in electrification components. It’s worth noting that we do not engage in batteries, so steering clear of that domain. But, in all other electric vehicle platforms, we provide our technological expertise. Despite the current global trends, we believe there’s immense potential in the Indian electric vehicle landscape, and we are actively preparing for its growth.

Adoption of two-wheelers has been commendable, due largely to the FAME incentives. We continue to collaborate with leading OEMs, providing electric drives, motor controllers, and related components. However, it’s important to note that we do not delve into battery manufacturing for two-wheelers at present.

The FAME incentives are being tapered down, and a potential revision is on the horizon. Currently, with a reduction in incentives and increased scrutiny, the market for two-wheelers seems to be less active. This dip in numbers is a common occurrence, not just in India but globally, when incentives are withdrawn. There is a temporary decline before reaching a new steady state, and subsequent resurgence. We believe we are currently in that phase.

It’s crucial to recognise that the current sales numbers may not accurately reflect the dynamics of the EV segment. We believe that the two-wheeler scooter segment will see a number of launchesin the coming years, and we are prepared for that anticipated surge in demand.

Mr. Mudlapur: Electrification of three-wheelers is currently in its infancy, with relatively small numbers on the road. Although some are existent, particularly for e-commerce operations in the city, but it’s still at a very early stage. We do have technologies in place for electric three-wheelers as well, and have extended those offerings to OEMs, but I believe, the most significant momentum in electric vehicles is currently centred around two-wheelers.

Karin: Our investment plans are proceeding smoothly. We are on track with investments in production and further localisation. As a company, we will monitor the market dynamics and assess the changes in demand and technological trends so that we remain flexible to adjust as necessary. But overall, our investments are progressing according to plan.

Mudlapur: It’s a very interesting question to reflect upon, specifically in the mobility sector today. The reason I say this is because mobility is undergoing a fundamental transition and transformation. There is a lot of action happening on multiple fronts in the sector.

Going forward, we will see changes in terms of value chain, business models, and how OEMs would want to do some things themselves and have dealers do the rest. We will also see developments in the amount of software-led features that come into the vehicles. And, to tackle and spearhead all these changes at once, we would need extremely capable and well-trained people. So, in addition to the typical challenges of the financial sector and how we want to maintain our performance and results, it would also be imperative to get our associates prepared for the transition, both in terms of skills, mindset, and capabilities to engineer this change. For me, that would be one of the biggest things that would happen.