Companies draw up strategy to fight demand slowdown; automobile body SIAM hints at paring growth target.
The coming festive season is unlikely to bring cheer for the automobile companies. Leading manufacturers today said they did not expect consumer demand to rev up sales substantially this October, due to uncertainties over increasing lending rates and fuel prices.
“Market conditions are tough. The fundamental economics related to increased interest rates and fuel prices have impacted affordability of buyers. The festive season may bring in sales, but I doubt it will rev up the market,” said Arvind Saxeana, director (marketing and sales), Hyundai Motor India Ltd (HMIL).
Concurred Neeraj Garg, member of board and director (passenger cars), Volkswagen India. “Initially, we were expecting the industry would grow by 16-17 per cent. But now it seems the industry would achieve single-digit growth numbers. So far in September, sales have not grown and with the ‘shradh’ period setting in, volumes are not likely to pick up this month,” he said.
On the back of strong demand during the festive season automobile sales had touched a record high last October, with the industry growing 46 per cent to report sales of 14,60,655 units during the month.
HMIL, the country’s second-largest car maker, which had earlier announced plans to cut down on exports to cater to demand in the domestic market, is now taking a re-look at its exports strategy and pushing sales overseas to counter the slowdown in the domestic industry.
Over the last two months, HMIL’s volumes in the domestic market declined by nine per cent to 52,319 units as compared to the corresponding period last year. Exports have grown by 11 per cent to 48,378 units.
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Tata Motors, too, which reported a decline of 15 per cent in sales at 98,187 units in the first four months this year, confirmed the company was slashing production across passenger and commercial vehicle segments.
“We have adjusted production to align with the demand. The production cuts vary across models,” said P M Telang, managing director (India operations), Tata Motors.
| NEWS ON WHEELS |
| Bajaj to showcase car next year Bajaj Auto will showcase their four-wheeler in the Delhi Auto Expo next January. “The car will be shown to everyone, including Nissan Renault,” said Rajiv Bajaj, managing director. Renault-Nissan had entered into an agreement with Bajaj Auto for the project. While Bajaj was to do the designing and develop the vehicle, the Franco-Japanese partner was to market and sell it. The companies will take a final call on marketing only after reviewing the final product. |
| Hero MotoCorp to drop Honda name The country's largest two-wheeler maker Hero Motor Corp said it would start dropping the Honda brand name from its existing products from this financial year. The company, which plans to introduce eight new products, has already announced it would launch a scooter under the brand 'Maestro' and off-road bike 'Impulse' under the Hero umbrella. |
| JLR to increase manufacturing Tata Group-owned luxury car maker Jaguar Land Rover (JLR) said it was looking to increase manufacturing of its vehicles in India to escape the high duty on its products imported into the country. JLR Executive Director Mike Wright said vehicles imported from the UK attract high customs duty, so the company may look at producing more vehicles locally. |
| GM to review product prices General Motors India said it would review the prices of its entire range of products this month, as core input materials are becoming costlier. “We have to review the prices on a regular basis to consider the rates' movement. We will review the prices of our vehicles in September to see if any rise can be done in October,” said Karl Slym, President and MD in India. |
| Mahindra Reva to launch electric vehicle Mahindra Reva Electric Vehicles will introduce a new product in the next 18 months based on a model from parent group Mahindra & Mahindra's existing portfolio. |
| Volvo Buses to invest Rs 200 cr in 2 yrs Volvo Buses on Wednesday it would invest more than Rs 200 crore in India over the next two years to expand capacity and develop new products, including medium-segment buses. The company operates only in the top-end bus segment, with prices ranging from Rs 75 lakh to Rs 1 crore. |
| Honda to launch 100-cc bike Honda Motorcycle & Scooter India will launch a 100-cc motorcycle priced between Rs 40,000 and Rs 45,000 next financial year. The company said it would review the prices of its existing products next month to minimise the impact of escalating raw material costs. |
| Toyota to increase prices by 2% Carmaker Toyota Kirloskar Motor will raise the prices of its vehicles by two per cent from October 1, except for Etios. The company has already increased the prices of its vehicles twice this year — in April and July — by a total of three per cent. |
Honda Siel Cars India is gearing up to beat the slowdown blues with the launch of small car Brio. Jnanesar Sen, senior vice-president (sales & marketing), said, “We are still constrained by supply of components after the Japan earthquake.”
Industry body Society of Indian Automobile Manufacturers (SIAM) indicated that growth targets for the financial year may be revised downward again in October. Pawan Goenka, president, SIAM said, “Passenger vehicle sales have not been growing. In the first five months, the PV segment has grown by two per cent as opposed to the target of over 10 per cent. Sales have dropped over the last two months by 8.9 per cent and 5.7 per cent, respectively. We may have to revise targets.”
In July, SIAM had lowered its vehicle sales growth forecast for FY12 to 11-13 per cent from the earlier estimate of 12-15 per cent made in April, mainly due to higher interest rates and rising fuel prices. SIAM, however, held the long-term prospects in the Indian market stand good. By 2017 the domestic industry is projected to sell 5.6 million vehicles while exports are to touch 1.3 million units.