Uday Kotak: Auto industry needs to be ready for ongoing structural changes

The auto sector needs to be aware of some of the major structural changes that are happening in the industry, said Uday Kotak, chairman and managing director, Kotak Mahindra Bank while addressing the 59th annual convention of Society of Indian Automobile Manufacturers (SIAM).

Giving the example of Ola and Uber having capacity utilisation of 40-50 percent compared to capacity utilisation of a private car at 3-5 percent, he said if this behavioural change were to become structural then the auto industry needs to be ready for this structural change.

The second big change that Kotak pointed out was highways becoming more efficient, a change that has increased efficiency of trucks and vehicles resulting in better capacity utilisation. This is a structural change which is positive for the economy but in the short run it has some impact on demand, said Kotak.

"The third change is the government allowing trucks to carry additional capacity per truck, so again there is impact on short-term demand for trucks. So we need think about the changes that will happen on the structural side as well as the cyclical side," he said.

Kotak said that the banking industry is ready to finance any kind of vehicle and there is enough liquidity in the banking system today. He added that the idea of having a captive finance company as many of manufacturing companies have is a good one and can help push sales.