Tata Motors CEO sees West Asia war as brief hurdle to CV demand
The implications of the West Asia war, specially diesel price hike, will have a short-term impact on domestic commercial vehicle demand, which is expected to grow in single digit this fiscal but India’s macro-economic growth will help overcome it in the long term, Tata Motors Ltd MD & CEO Girish Wagh said on Thursday.
Terming fuel price hikes and increase in cost of commodities as “cyclical headwinds”, he said those will lead to some changes in the quarterly and annual demand but in the long term, “India's growth story will lead to increase in road freight, and therefore the commercial vehicle demand”.
“We do have short-term headwinds. The Middle East crisis, the resultant increase in oil prices, and the final resultant but reduced intensity increase in diesel prices -- it is a headwind,” Wagh told reporters in an interaction. Noting that commodity cost increase is also a headwind, he said, adding, “but we believe that these are more cyclical headwinds”.
Presenting a bullish long-term outlook, Wagh said, “The GDP growth, industrial index of production, the way it has been growing, the growth in manufacturing, growth in consumption, growth infrastructure investments, we believe these are structural tailwinds.”
He further said, “From that perspective, in the longer term, the tailwinds will have their effect more than headwinds and therefore, in the longer term, the industry will grow.” Stating that freight growth on road is very closely linked to GDP growth, he said,” Till the time we see GDP growth happening in the range of 6-8 per cent, we should see a healthy growth in road freight.”
Overall, he said,” The cyclical headwinds will lead to some changes in the quarterly demand, or even for that matter the annual demand, but I think in the long-term India’s growth story will lead to an increase in road freight, and therefore the commercial vehicle demand.” Wagh also highlighted that a stable regulatory road map will also help in the long-term growth of the CV industry.
