Here is a complete look at all that have made headlines in the auto space during the week
Almost every day, auto companies and banks join hands to roll out finance schemes that are targeted at enticing buyers. While the schemes may look tempting, there is another side of the story worth telling. With rising cases of loans going bad, banks have become extra cautious when it comes to lending to the auto sector. We take a wider look at this in today’s automotive wrap of the week. But, here is a complete look at all that has made headlines in the auto space during the week.
Tata Motors targets to be among top three
Tata Motors intends to regain ground it ceded to rivals and re-enter the league of top three carmakers in the country. But, that may be easier said than done, given how its market share has sunk to a new low.
Tata Motors finished fourth in FY20 with a share of 4.98 percent of the passenger vehicle (PV) segment, as per data shared by the Society of India Automobile Manufacturers (SIAM).
Thierry Bolloré to take charge at JLR
Less than a year after being ousted from Renault, Thierry Bolloré - who was known to be close to former-CEO-turned-fugitive Carlos Ghosn - will take charge as chief executive of Jaguar Land Rover.
The development brings to an end Tata Motors’ six-month-long head-hunting exercise, which began after the announcement of current JLR CEO Ralf Speth’s retirement.
Kia sales crosses 100,000
South Korean auto major Kia Motors on Friday said it has crossed the 1-lakh cumulative sales milestone in India within 11 months since it started selling vehicles here.
The company entered the Indian market with the launch of its now-popular SUV Seltos in August 2019 and later on launched the multipurpose vehicle - Carnival.
Demand recovers at Maruti Suzuki
An increase in demand from first-time buyers and the gradual lifting of the lockdown have pushed demand for Maruti Suzuki cars to climb to 90 percent of pre-COVID-19 levels forcing the company to start another shift at its Gujarat plant.
Strong uptick in retail sales which was nearly double than the wholesales in June has led to inventory levels of Maruti Suzuki coming down by the end of July. While domestic passenger vehicle wholesalers (company to dealer) stood at 51,300, its retails (dealer to consumer) stood at slightly over 90,000 units.
Discounts make way for price hikes
Bajaj Auto, TVS have increased prices over the last couple of months. Maruti Suzuki reduces discounts in July, compared to the June quarter. The automotive industry had recorded zero sales in April after the nationwide lockdown announced in March.
Two of India’s biggest two-wheeler companies Bajaj Auto and TVS Motor Company , which control nearly 30 percent of the country’s motorcycle and scooter market, have raised prices over the last couple of months
Banks tread with caution
Over the past two-three months the industry has been abuzz with news of auto companies tying up with banks and other financial institutions to get vehicle loans before more reachable to the car and motorcycle buyers.
This included the roll out of a variety of schemes such as ‘buy now pay in 2021’ and ‘no EMI for 3 months’ aimed to entice the buyers. But with rising cases of loans going bad lenders have become more cautious than ever claim automakers.
Shashank Srivastava, Head of Marketing & Sales, Maruti Suzuki India, said, “The interest rates have come down but not as much as we would have thought they would. The banks are relooking at the credit ratings of the consumer once again. They are reassessing the credit ratings of the consumers”.
Not only do retail consumers need loans to buy the vehicles, dealers almost entirely depend on financing to support their business. With rising cases of dealerships being in stress due to the lockdown and being unable to repay the loans in time, banks have become extra cautious.
“The process of giving loans to dealers for inventory has now become very strict,” said Shailesh Chandra, the head of passenger vehicles - Tata Motors.
Dealers of other auto companies have also reported financing problems for particular vehicle segments. For instance the entry level bike segment which caters to the bottom pyramid buyers have seen reluctance from banks especially those with no previous credit record.
Rakesh Sharma, Chief Commercial Officer & Executive Director, Bajaj Auto said, “The availability of cash in the hands of the entry level buyer is going to be severely impacted. I also feel that the financiers are going to make it difficult for them to get loans. They will be choosing the better customers in that segment. So certainly, the very much entry-level will get impacted more.”
Then there is the three-wheeler segment, which like the commercial vehicle segment has suffered the brunt of the Covid-19 impact. In most markets local administrations continue to restrict free movement of three-wheelers used to ferry passengers.
Thus fearing new cases of bad loans banks have become averse from lending to this segment.“When it comes to three-wheelers, which is more B2B, there certainly, we are facing financing issues because the financing companies have not yet got their mind together on how to deal with the autorickshaw because their business has not resumed”, added Sharma.