Theme: Auto sector | Do EVs pose a threat to ICE vehicles currently?

In the State of the Economy podcast, businessline’s S Ronendra SIngh talks to Srikumar Krishnamurthy , Senior Vice President & Co-Group Head - Corporate Ratings, ICRA Limited, to understand the various facets of the automotive industry, primarily focusing on its performance, challenges, and trends. The discussion commenced with a retrospective look at the automotive sector, which recorded high vehicle sales across segments after the lull bought by the Covid-19 pandemic. Commercial vehicles and two-wheelers faced notable setbacks due to economic activity restrictions and price hikes, while the passenger vehicle segment encountered supply constraints, primarily linked to semiconductor shortages. The conversation pivoted towards the increasing popularity of SUVs, attributing their rise to changing customer preferences such as higher ground clearance, enhanced driving quality, and seating comfort. This shift influenced the market as the demand for sedans and small cars witnessed a relative decline. Insights were shared on the impact of electrification trends on the market, highlighting a relatively slower growth rate in the electric vehicle (EV) segment for passenger vehicles. It was noted that while EV sales in commercial vehicles could grow, overall adoption remains relatively low due to factors like infrastructure limitations, consumer mindsets, and awareness. The discussion also touched upon factors affecting two-wheeler sales, including significant price hikes and the impact of interest rates on financing. The conversation concluded with expectations for a sustained growth trajectory in various automotive segments, albeit with varying degrees of impact from electrification trends. In essence, the conversation provided a comprehensive analysis of the automotive industry’s dynamics, spanning demand, trends, challenges, and prospects across different vehicle segments and their relationship with emerging electrification trends.