Escorts says entire automobile market is seeing a slowdown

Engineering and farm equipment maker Escorts Ltd on Friday said that the entire automobile market is seeing a slowdown and the company has predicted the downturn, but not to the degree of the slowdown that one is seeing now.

The automobile industry has been hit hard due to slowdown, caused by several factors, like high GST rates, farm distress, stagnant wages and liquidity constraints.

In an interview to CNBC-TV18, Nikhil Nanda, chairman and managing director, said, "Agriculture tractor market is cyclical. Last four years have been brilliant. You talk about a decline of 10-12 percent. However, in context to the 3-4 years robustness in terms of growth that you have seen, one should not ignore and should not measure only the degrowth of the last six months, then the impression and the conclusion can be very theoretically narrowed."

"Escorts has taken many steps in terms of launching technology and products and we are also looking at the international market. So our joint venture with Kubota for instance, we will have a global partnership, we will have access to the global channel of Kubota and we are looking at joint brand outside India,” he added.

"Our relationship with Kubota started in December 2018 and our base is very small. So, Escorts is not exporting as much as it should be exporting in terms of comparison. However, going forward, we have a phase I, II and III plan with Kubota in terms of how we complement our product portfolio in markets and geography. Also, there is a very robust plan in terms of volume uptick that will get significantly built up over a period of 3-5 years. So the relationship with Kubota is very strategic in nature as we don’t want to spend time in creating ecosystem, we will rather spend time in creating product and technology and have a partner like Kubota to give us the elbow room of entering into markets, which will help us to derisk in the future,” Nanda said.