Auto Sector to back on growth path in 3-5 years frame.

Year 2019 was the worst performing year for the Auto Sector in India. With such a slowdown, almost every automobile company either in 2-wheeler segment or 4-wheeler segment, everyone reported a decline in the volume of vehicles sold compared to the corresponding season in the previous year.

But starting 2020, things are expected to change. In 2019, Indian Government had started pushing for Electric Vehicles and was aiming to move out of any non-renewable energy based vehicles 2-wheeler or 3-wheelers by 2025.

Electric Vehicle. Image Credits

Due to this push, many companies had started their activities towards the development of Electric Vehicles in their Research and Development centers. Though nothing had materialized in 2019 since it was just a beginning, but things are soon expected to pickup in upcoming 3-5 years timeline.

Automotive maker Mahindra and Mahindra had been early starter and has been actively investing towards Electric Vehicles via Mahindra Electric Mobility Ltd, which was formerly known as Reva. In 2020, many news have started pouring in where in auto makers like Tata Motors, Maruti Suzuki, Hyundai have declared their launch of upcoming models in EV category.

This push is expected to be a game changer for the revival of Automotive Industry in India which shall rise back and the benefits shall pour in, in the upcoming 3-5 years investment time-frame.

Not only car makers would benefit from this development, Automotive parts manufacturers who are suppliers to Electric Vehicle manufacturers are also going to benefit from this revolution.

Thus keep an eye of such EV related business activities and analyse the best companies with their fundamentals and growth potentials and take a judgement for investment to reap good benefits.

Greaves Cotton diversifying business to beat Auto Sector slowdown

Amidst slowdown in Indian auto sector, many auto makers have announced their plans to shutdown factory for few days to cut the existing inventory levels. But there seem to a player catering to Auto sector which is already executing its plan to steer out its business from the slowdown.

Recent slowdown in the auto sector and the expected disruption due to introduction of BS-VI emission norms has not deterred Greaves Cotton which continues to diversify its business to allied areas to remain less affected.

Greaves Cotton has entered into business areas like Manufacturing of Engines for Marine vehicles, Defence and Construction equipment. It has also forayed into sales of vehicle spares and parts. It has also started providing third party after-sales servicing of 3 wheeler vehicles.

Not only the above, it is also betting on the disruptive areas of auto sector like Electric Vehicles. It had acquired over 81% stake in an Electric two wheeler maker Ampere Vehicles for Rs. 120 crore. With this agreement, both the firms plan to leverage each other's synergies. Ampere Vehicles has the technology and platform, while Greaves Cotton has access to Market and large distribution network which can help them grow.

This diversification doesn't appear to be any sudden decision due to recent slowdown. The company has reduced its automotive engine contribution from 60% to 40% over the last 3 years. This transformation has not impacted the company since revenue has grown at an annual rate of over 10% each year and the board is confident on the growth prospects of the organization.