There is idle capacity at several auto and auto parts manufacturing units across India. A couple of truck and bus making factories of a leading producer is operating at less than 40 percent of its full utilisation level. Bharat Forge is not making any new investment towards capacity as its existing facilities are operating at 50 percent levels.
These companies are now pinning hopes on the second half of 2020 for a revival. More on this later in the copy but here is a look at what made headlines in the auto space during the week.
TVS to launch new bike on BMW platform
Three years after launching its first product, the TVS Motor Company-BMW alliance is gearing up to launch its fourth offering in the premium segment in 2021, a top company official has said.
This alliance has already spun off two motorcycles for BMW, and the new bike will also be based on the same vehicle platform.
Jaguar Land Rover trumps Audi to become No. 3
A top company official said that JLR sold 5,000 cars in India which is more than what Audi, the struggling luxury brand of Volkswagen group, sold in 2019.
Mahindra in talks for funds in Ssangyong
Mahindra & Mahindra (M&M) is in talks for a 450-500 billion Won (up to $430 million) fund infusion in its struggling Korean subsidiary SsangYong Motor Company through a mix of equity and debt, a top company official said.
Acquired in 2010, SsangYong has been the troubled unit for M&M almost every year despite several attempts made by the Mumbai-based SUV specialist to turn around operations. M&M hopes to turn the operations profitable by 2022.
CEAT inaugurates new plant near Chennai
RPG Group-controlled CEAT inaugurated its sixth tyre-manufacturing plant near Chennai to boost market share in the car and two-wheeler radials segment controlled tightly by market leader MRF.
The plant, which has a manufacturing capacity of 28,500 passenger car-radial tyres and 2,500 motorcycle-radial tyres per day, has seen an investment of Rs 1,400 crore in Phase 1. CEAT is presently the fourth-largest tyre-maker (tonnage) in India.
M&M lines up multiple launches
M&M has lined up multiple launches across various segments to strengthen its market share as it prepares to spend Rs 15,000 crore over three years.
About half a dozen passenger vehicles (PVs), including three new sports utility vehicles (SUV) and three new electric vehicles (EVs), in addition to several upgrades for all its existing products, will be launched over 18-24 months.
JLR launches Discovery Sport at Rs 57.06 lakh
Tata Motors-owned Jaguar Land Rover on February 13 launched the BS-VI version of its SUV Discovery Sport in both petrol and diesel engines at a starting price of Rs 57.06 lakh.
The new Discovery Sport comes with features such as all-new premium LED headlights with daytime running lights, rear LED lights and animated directional indicators, among others.
After a washout 2019 automakers pin hopes on 2020
With no respite from the poor sales run in sight two-wheeler and PV manufacturers are pinning hopes on the festive season for demand revival.
The implementation of Bharat Stage VI (BS-VI) emission norms from April 1 which is set to push up costs by 10-15 percent will act as a damper that will subdue demand for at least two immediate quarters, manufacturers say.
M&M, Tata Motors, Hero MotoCorp, TVS Motor Company and Bajaj Auto believe that the domestic market will take at least six months to absorb the cost hikes before returning to growth.
Speaking to reporters after announcing the December quarter results Pawan Goenka, managing director, M&M said, "The first two quarters are expected to be subdued due to the BS-VI-led cost hike. Thereafter, we may see growth returning during the festive period."
Automotive companies were earlier pinning hopes on a cut in Goods and Services Tax (GST) which was shot down by the GST Council in the Economic Survey released by the government in January-end.
In fact, TVS Motor Company is still hopeful of a GST cut that would be timed against the implementation of BS-VI to nullify the impact. In a recent analyst call KN Radhakrishnan, director and CEO, TVS Motor Company said, "We are still hoping for a cut in GST."
While several motorcycles, scooters, cars and SUVs have been upgraded to BS-VI already sporting new price tags, a majority of the industry is yet to supply BS-VI vehicles into the market.
New BS-VI vehicles are getting supplied to the market almost every day. For now, a majority of these are petrol-powered vehicles being produced and supplied with BS-VI engines.
Diesel BS-VI vehicles are also being produced but only a handful of such models are sold to customers due to non-availability of BS-VI fuel presently.Domestic PV sales during April-January period were down 15 percent to 2.38 million as against 2.81 million. Two-wheeler sales were down 16 percent during the same period to 15.25 million units as against 18.12 million units. Commercial vehicle sales continue to be the worst hit, recording a fall of 20 percent to 645,991 units as against 810,853 units.
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