Tuesday, 23 Jul 2019

Interview | Hybrid is the right technology for sustainable transition to EVs: Rajesh Goel – The Financial Express

The Indian passenger vehicle (PV) market is going through its worst phase in almost a decade, but Rajesh Goel, senior vice-president & director, Sales & Marketing, Honda Cars India, believes that as the festive season approaches, the market should revive. “There is a lot of potential and a lot of pent-up demand,” he says. In an interview with FE’s Vikram Chaudhary, he adds that while electric vehicles (EVs) are an excellent choice for a country such as India, for making a sustainable transition to EVs, one has to go via the hybrid technology. Excerpts:

A lot of companies have announced they will launch electric cars in India this year and the next. But Honda hasn’t gone public with any such plans. Why?

EVs are an excellent choice for a country such as India, which is dependent on foreign oil. However, we believe that for making a sustainable transition to EVs, one has to go via the hybrid technology. Simply launching an EV is easy. But if you are not able to sell it in the projected volumes that are required for the job you intend it to do, it can become a big concern. It doesn’t make business sense to simply launch EVs if they are not suitable for local infrastructure, if they are not affordable to buy in the first place, and if they don’t offer a good actual range.

At Honda, we are committed to bringing the most environmental-friendly and contemporary technologies to India—those that actually fulfil the needs of the market. Just because a company doesn’t announce its product plans doesn’t mean it’s not working on newer technologies. We will introduce the right technology for the Indian market at the right time.

The Indian PV market is going through its worst phase in almost a decade. What are the reasons you attribute to this slowdown?

The Q1 of last fiscal saw almost 20% growth, but it was on the back of a low base compared to the same period a year earlier when sales had slowed down due to anticipation of GST. Then, immediately, the market saw negative growth, and even festive season sales were poor. There are multiple reasons for this—Kerala floods, banking crisis, etc. Around the same time, global crude oil prices went up, resulting in high fuel prices for customers, and the rupee also depreciated. However, almost everything started getting corrected by December-January—fuel prices softened and the rupee also became stronger—but the market did not respond in a positive way. Some argued that after the general elections growth will return, but even that hasn’t happened.

However, we believe that as we approach this year’s festival season, the market should revive, maybe earlier. There is a lot of potential and a lot of pent-up demand.

Is it correct to say that the advent of shared economy (ride-sharing) and the consumption habits of the millennials (globally it’s argued that they don’t like to ‘own’ cars) are having an impact on PV sales?

This statement might hold true for developed markets where car ownership is very high, but in India where car ownership per 1,000 people is very low and there is a lot of potential in smaller towns, I don’t see that as an issue. In fact, ride-sharing can lead to more car sales. Take the example of a person who, today, commutes via a bus. Tomorrow, she opts for ride-sharing and has her own private space in a vehicle (but with 2-3 other people). This naturally leads to a desire for expanding that private space and owning a car, in a market such as India.

This year we saw two new global carmakers entering the Indian market, and one announcing its entry by 2021. How will this increased competition affect Honda Cars India?

The fact that new companies are entering the market shows that India has a lot of potential. In business, competition should always be welcome. These companies are our competitors in one market or the other globally. Increased competition benefits the end-customer.

You launched the new CR-V last year; this time in both diesel and petrol engine options. Yet it hasn’t been able to sell as well as certain competitors…

Over time, both the market dynamics and fuel dynamics have changed. When the CR-V was initially launched more than a decade ago, it was primarily a petrol market, then it shifted to diesel, and once again it’s moving towards petrol. While the CR-V, today, doesn’t enjoy as high a market share in its segment as it did earlier, as far as numbers are concerned this premium SUV is selling more than what it used to sell earlier.

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