Tamil Nadu - Chennai

Meltdown forces commercial vehicle segment to shed 40-50% of volume

CHENNAI: Owing to the global financial crisis, the commercial vehicle segment volume in the past one month has come down by 40-50 per cent, CII past president and Ashok Leyland managing director R. Seshasayee said on Thursday.

Delivering the keynote address at a two-day seminar of Auto SCM India 2008 organised by the CII Institute of Logistics, he said: “Whenever there is an economic crisis, we have to re-focus our energy on building infrastructure… Unless we address the infrastructure and build it on a par with international standards, Indian industries cannot be competitive.”

Mr. Seshasayee said: “The automobile sector faces the ‘notorious’ problem of being cyclical. Even after being in the field for 30 years, I am not able to understand why purchases are made at the end of a month.”

Referring to the global meltdown and credit squeeze, he said the service providers must commit themselves to continuous improvement and go in for innovation and technology upgrade to bring out vehicles in a quicker cycle. “We have to speed up our supplies, reduce cost, eliminate inventory and ensure quality production. This will solve a lot of problems.”

On the tax front, he said tariff barriers were more expensive than physical barriers. The Centre was committed to implementing the Goods and Services Tax (GST). “However, we should get an assurance that Central Sales Tax will be removed at the time of the implementation of GST.”

Industries Secretary M.F. Farooqui said: “We have to make use of this recessionary period of 1-2 years to invest in infrastructure, and the State government is committed to filling the gap.” Quoting a report, he said that by 2016, the automobile sector would grow by four times to reach $145 billion and automobile parts to $40 billion, and both would offer employment to 25 million people.

R. Dinesh, Managing Director, TVS Logistics Services, and Auto SCM India 2008 event chairman, urged the Centre to grant industry recognition to the logistic sector, and the State Government to provide training to workers low on skills.

K. Venugopal, Joint Editor, The Hindu and The Hindu BusinessLine, said that in India, the two-wheeler segment was the first to show signs of fatigue last year, and the four- wheeler segment followed suit.

The need of the hour, he said, was to lower cost and go in for value addition.

Mr. Farooqui released the Logistics Service Providers Directory 2008 and launched the website of the CII Institute of Logistics.

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