Two-wheeler or carmakers may not drive stark growth or profitability in the future amid rising inflation and competitive pressure, according to Kenneth Andrade.
“Inflationary pressures will hurt the two- and four-wheeler industry the most as the ability to pass on the high costs to the last mile will be negligible going forward,” the chief investment officer of Old Bridge Capital Management Pvt. told BloombergQuint's Niraj Shah in an interview.
Andrade said even a foray into electric vehicle segment will not aid the industry's growth as they won't make money, and new entrants will only add to the fragmentation that already exists in the industry.
“Cumulatively the two-wheeler space makes around Rs 12,000 crore profitability. And that number used to belong to 4-5 companies,” he said. “The profitability is up for redistribution or depreciation as we're seeing entrants into the two-wheeler space.”
The fragmentation among carmakers is way faster than with two-wheelers and even if we don't factor in the shift in technology, he said. As a result, the four-wheeler market will get further divided, he said.
“New capacities have come and even the largest company in the industry is losing its market share and you can't have a good balance sheet if you are losing market share.”
Watch the full interaction here
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
