In today’s wrap of the week, we look at why a section of the industry feels disenchanted by the way the industry has been at work.
Tata Motors caught the market off guard reporting a loss that was more than the market cap of TVS Motors, India’s fourth biggest two-wheeler maker. This news dominated headlines from the auto sector this week. But quietly there was another development, on the way how automotive sales numbers should be reported. In today’s wrap of the week, we look at why a section of the industry feels disenchanted by the way the industry has been at work.
Honda launches CB300R at Rs 2.41 lakh
Honda Motorcycle and Scooter India (HMSI), the country’s second largest two-wheeler maker, has launched the CB 300R at Rs 2.41 lakh (ex-showroom, pan-India).
The CB300 R is powered by a 286cc liquid cooled engine that generates a peak power of nearly 31ps. The CB300R will feature full LED headlamps, LCD instrument display, runner mounted steel handlebar, 2-channel ABS. The bike weighs 147kg without fuel
Tata Motors reports one of India inc’s biggest quarterly loss
Tata Motors reported a net loss of Rs 26,961 crore for the quarter ended December 2018 impacted by an exceptional item of asset impairment of Rs 27,838 crore. The company had reported a profit of Rs 1,214.6 crore in the same quarter last fiscal.
Uncertainty over China and with the possibility of a hard Brexit looming large, Tata Motors on February 7 said it is revising its pre-tax margin guidance to 3-6 percent in FY20 from 4-7 percent announced six months back.
Tata Nano production comes to naught
Production of the world’s cheapest car Nano has come to a grinding halt, as Tata Motors has begun the process of bringing down the curtains on the troubled car. As indicated by the company, Nano, unlike its peers, will not get any regulatory upgrades essential to keep it going.
From 83 units in January 2018, the production of Nano hit zero in the same month this year. This is the first time since its launch in 2008 that not a single Nano was either produced or sold in any month
Govt slashes subsidy budget on electric vehicles
The Centre has slashed subsidy on electric vehicles for the next financial year by 25 percent to Rs 195 crore, according to Union Budget 2019 documents.
Subsidy for the current financial year stands at Rs 260 crore. This is the first such sequential drop in provision provided by the government since the scheme Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) was launched nearly four years ago. While the government had kept aside Rs 260 crore as subsidy for the current financial year (2018-19) it was revised downwards to Rs 145 crore.
Two-wheeler makers want two slabs in GST
Even as the chorus on reduction in Goods and Services Tax (GST) on two-wheelers grows, the industry is now in the favour of having twin slabs instead of one.
According to the country's second largest two-wheeler maker Honda Motorcycle and Scooter India (HMSI), two-wheeler companies have supported a plea to reduce GST on some two-wheelers with engines of a certain size.
To report wholesale or retail?
A few months ago the automobile dealer association of India decided to source vehicle registration data directly from the government in an attempt to bring ‘the real sales picture’.
FADA, their apex lobby body, which was founded in 1964 but remained dormant until the late part of 2018, suddenly became hyper active in issuing retail sales data of all class of vehicles.
For long, the dealers have been complaining about dumping of vehicles by companies the result of which was high inventories, sometimes throughout the year.
Sudden regulatory changes, many times enforced by the highest judicial authority like the Supreme Court, made matters worse for the dealers when they were required to liquidate their stock literally overnight (BS-III to BS-IV transition).
At other times axle load norms of trucks and buses were altered that created confusion about existing inventory thereby creating a demand vacuum for ensuing months.
"When vehicle manufactures wish to inflate their numbers they will show even those invoices which dealers may have only placed an order for, which can be changed or even cancelled during the time of actual delivery. This classifies as wholesales," said a top executive of a two-wheeler manufacturer.
If stuck with high inventory, especially during an off-season, dealers are forced to offer unusually high discounts, which many times are from the dealer's own pockets, to clear the inventory. After all, there is only a limited space at the warehouses.
This is the primary reason why there exists a sizeable mismatch in wholesale (from company to dealer) and retail numbers (from dealer to customer). Many western countries report only retail numbers as it helps provide the best picture of the demand scenario.
FADA collects retail sales data from 75 percent of the country’s regional transport offices made available by the Ministry of Road Transport and Highways. The organisation also provides additional data such as inventory days of a particular vehicle segment. Higher the number of days, worse the situation. Some vehicles lying with dealers are more than one year old, according to a Mumbai-based manufacturer.Nevertheless, the trend of reporting retail sales is now slowly gathering pace. Tata Motors has decided to issue retail sales of both passenger and commercial vehicles from now on. Others are expected to follow suit. The government is also in the favour of reporting retail numbers for which it floated VAHAN where all the RTOs are linked to.