Here is the Weekly Wrap of all the major developments from the automotive industry
At a time when Tata Motors turned around fortunes of a troubled plant running at one-tenth its peak capacity to full capacity, a German multi-national truck and bus maker has nearly shut shop in India. This highlights the extremely challenging market environment in every segment of the Indian automobile market. More on this story-of-the-week later in the article but first here is the brief list of all the major developments from the automotive industry.
Benelli comes back to India
Italian bike brand Benelli is ready to roll out bikes from its Indian showrooms once again after a six months hiatus. The company has tied up with a Hyderabad-based auto dealer from the Mahavir Group for assembling mid-capacity bikes. While Phase 1 will be about setting up the assembly plant Phase 2 will be about local R&D, local manufacturing and exports.
Eicher Motors and MRF miss Q1 profit estimates
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Eicher Motors, the maker of Royal Enfield bikes, reported a 25 percent growth in net profit at Rs 576 crore for the quarter ended June, missing a Reuters poll of analysts estimates.
MRF, the country’s largest tyre maker, too missed estimates during the same quarter posting a growth of 145 percent in net profit for the June quarter at Rs 260.74 crore.
Bajaj’s discount gamble pays off
Bajaj Auto’s discounting war in the budget bike segment has led to a significant jump in its market share at the cost of a loss in market share of Hero MotoCorp, TVS Motor Company, and Honda. At Rs 30,700 Bajaj’s CT100 is the cheap motorcycle on sale in India.
Mahindra net jumps 67 percent, TVS net grows 13 percent
Tractor and utility vehicle major Mahindra & Mahindra posted 67 percent jump in net profit at Rs 1,257 crore for the quarter ended June, beating street expectations on the back of a surge in demand for tractors and trucks.
TVS Motor Company, the country’s fourth largest two-wheeler company, posted 13 percent rise in net profit at Rs 146.6 crore for the quarter ended June, missing estimates by a huge margin. Steeper raw material costs and increased competition in the budget bike segment hit the company.
Mahindra hits back at Fiat’s accusations
Utility vehicle specialist Mahindra & Mahindra has termed Fiat Chrysler’s (FCA) allegations as baseless while also stating it has the right to manufacture and sell the Roxor off-roader in the US. FCA had filed a petition in the US seeking a ban on the sale of the Roxor as the vehicle, it stated, is a copy of Willy’s Jeep.
Volkswagen-owned MAN Trucks shuts shop in India
Unable to sustain operations in a tough market environment German heavyweight MAN Trucks and Buses called it quits this week in India after running operations for more than 10 years. The maker of premium trucks and bus chassis said it is aborting all product development and production plans in India with a promise to honour all existing sales and service contracts.
Additionally, it has put the Pithampur-based manufacturing plant on the block which it inherited from its earlier joint venture with Pune-based Force Motors. The company said it will develop India as a centre for R&D excellence supporting its global projects.
About 14 months earlier General Motors, one of the world’s largest car makers, decided to abort sales operations in India which had seen an unhindered run since the mid-1990s under the brands Opel and Chevrolet. A few months ago Eicher-Polaris announced the shutting down of its joint venture manufacturing of a utility vehicle after sales remained disappointingly low.
Prior to that, AMW, the heavy truck manufacturing company, which had a plant in Gujarat hit a low after its lenders decided to vest control and liquidate the company in parts or full to recover dues. Most recently Scania, a VW-owned company and a sister concern of MAN decided to stop bus body making operations after years of fruitless efforts to grow volumes.
As India nears the deadline for adoption of Bharat Stage VI (BS-VI) emission norms a number of companies have developed second thoughts on investing in the market. With the exception of big names like Suzuki Motor Corporation, Volkswagen Group, and Daimler most of the non-Indian brands have held back on making fresh investments. These include Fiat, Toyota, Hyundai and Ford.
While Hyundai has a strong pipeline of eight products until 2020 the company is not making any fresh round of investments for increasing output despite operating at more than 100 percent capacity.
BS-VI will pose the single biggest challenge for every automobile maker as costs rise will have to be kept to the bare minimum for sustainable business operation. As for trucks, the rise is expected to be in around Rs 3.5 lakh, something that many truck makers will find difficult to convince new buyers for.
Besides the commercial vehicle (CV) market is controlled by Indian players. More than 85 percent of the CV market is held by Tata Motors, Mahindra, and Ashok Leyland. The premiumisation of the CV market has not progressed at the same pace as the car market and fleet buyers still prefer to check cost over performance.
Daimler India Commercial Vehicles started sales operations in 2012 with a promise to fight Tata Motors in its own backyard. The German giant is yet to see profits flow into its coffers. However, it has garnered a 10 percent market share in the segment it operates in and says it is confident of breaking even this year.