India's largest two wheeler maker Hero Honda Motors Ltd (HHML) today said it has roped in global brand and innovation specialist, Wolff Olins to create a new identity after the exit of Honda from the joint venture.
"The new buzzwords at Hero Honda are Creation, Renewal and Re-energising. I am happy to have Wolff Olins partnering with us in this exciting journey into a promising future," HHML Managing Director & CEO Pawan Munjal said.
When the two partners announced their break-up, Munjal had said that the Honda name would be eventually dropped from Hero Honda and the company would take up a new identity.
Wolff Olins, a part of the Omnicom group , is working on the new brand identity in its totality. This includes the brand architecture, brand name, brand logo and brand positioning, the company statement said.
The two joint venture partners of HHML -- Hero Group and Honda Motor Co -- signed an agreement recently, wherein the former is going to buy all the 26 per cent shares of foreign partner in HHML,
The Hero Group and Honda had agreed to part ways from their JV in December last year. The BM Munjal-led group will pay Rs 3,841.83 crore for the Japanese partner's 26 per cent stake in Hero Honda.
Commenting on the new assignment, Wolff Olins Managing Director Charles Wright said: "We are indeed excited to be working on this mandate. Hero Honda is an Indian icon and it is a privilege to partner Pawan Munjal and his team on this journey of transformation.
"India is a strategic priority for us and for Omnicom as a whole, and therefore this mandate assumes a huge priority for us".
With offices in London, New York and Dubai, Wolff Olins is a global brand and innovation business that has, over the past four decades, worked on transformation initiatives for brands and corporates across the world, partnering them for growth.
100cc bike will drive Suzuki soon
Suzuki Motorcycle India will soon enter the entry-level 100 cc motorcycle market in the country as the Japanese firm looks to become a major player in world's second largest two-wheeler market. The leader in the niche super bike market, where Suzuki Hayabusa outsells every other big bike, expects its two-wheeler sales to pick up significantly once it doubles the annual production capacity to 5.4 lakh units, at the Gurgaon Plant, Suzuki Motorcycle India's vice-president (Marketing & Sales) Atul Gupta told ET in an interview.
Atul Gupta: Suzuki has a huge brand equity, that goes without saying. But, at the same time, I believe it would be fair to draw comparisons only within the two-wheeler industry. Suzuki Motorcycle has shown higher marked growth within the segment it is present and our sales are growing at the faster pace than the domestic market, but any noticeable change will happen once we double our capacity in Gurgaon and draw sizeable volumes in the local market.
What are the products that you plan to roll out from the new plant to drive Suzuki Motorcycle to the next level?
Atul Gupta : The current growth is led by scooters, where, in the mid-size segment, our market share has increased to 25% from 10% in the past one year. We are market leaders in the super bike category, with Hayabusa, Intruder, Bandit and GSX-R1000 giving us a huge lead over other global companies like Harley Davidson, Honda and Yamaha. Now, we are geared up to expand and introduce products for the mass volume segment like 100 cc bikes that will impact the Indian market with huge volumes in our kitty.
Hero Honda and Bajaj Auto together are likely to produce around 9-10 million motor cycles in the next fiscal. Suzuki Motorcycle's target is only half a million. How do you hope to build up volumes?
Atul Gupta : We are certainly looking at building on our volumes. The entry into the mass segment 100 cc bikes, that form around 50% of the 10 million Indian two-wheeler market, will help us leverage the brand and generate sales.
What is your road map to become a major player in India where young people now drive consumer demand?
Atul Gupta : There are two key areas of focus for Suzuki: product quality and customer service. We will continue to focus on launching India-engineered products, keeping customers in mind. We are steadily building a loyal base of customers and would continue to expand by ensuring high customer satisfaction levels. A strong and steadily growing distribution network will be our strength. Our final objective is to provide a varied range of products to Indian customers. Our strategy would be based on the core philosophy of making 'value-packed products' that generate 'excitement'.
Atul Gupta: Suzuki has a huge brand equity, that goes without saying. But, at the same time, I believe it would be fair to draw comparisons only within the two-wheeler industry. Suzuki Motorcycle has shown higher marked growth within the segment it is present and our sales are growing at the faster pace than the domestic market, but any noticeable change will happen once we double our capacity in Gurgaon and draw sizeable volumes in the local market.
What are the products that you plan to roll out from the new plant to drive Suzuki Motorcycle to the next level?
Atul Gupta : The current growth is led by scooters, where, in the mid-size segment, our market share has increased to 25% from 10% in the past one year. We are market leaders in the super bike category, with Hayabusa, Intruder, Bandit and GSX-R1000 giving us a huge lead over other global companies like Harley Davidson, Honda and Yamaha. Now, we are geared up to expand and introduce products for the mass volume segment like 100 cc bikes that will impact the Indian market with huge volumes in our kitty.
Hero Honda and Bajaj Auto together are likely to produce around 9-10 million motor cycles in the next fiscal. Suzuki Motorcycle's target is only half a million. How do you hope to build up volumes?
Atul Gupta : We are certainly looking at building on our volumes. The entry into the mass segment 100 cc bikes, that form around 50% of the 10 million Indian two-wheeler market, will help us leverage the brand and generate sales.
What is your road map to become a major player in India where young people now drive consumer demand?
Atul Gupta : There are two key areas of focus for Suzuki: product quality and customer service. We will continue to focus on launching India-engineered products, keeping customers in mind. We are steadily building a loyal base of customers and would continue to expand by ensuring high customer satisfaction levels. A strong and steadily growing distribution network will be our strength. Our final objective is to provide a varied range of products to Indian customers. Our strategy would be based on the core philosophy of making 'value-packed products' that generate 'excitement'.
TVS ropes in Virat Kohli to endorse Sport bike
TVS Motor Company has signed on one of India's brightest and most promising cricketing talents Virat Kohli as brand ambassador for its all new TVS Sport motorcycle. Virat Kohli will therefore feature on all advertising and retail material related to TVS Sport. The new TVS Sport is a powerful blend of a contemporary design and a highly reliable fuel efficient engine with the added convenience of an electric start.
HMSI mulls third plant to meet rising demand
Honda Motorcycle and Scooter India Limited (HMSI) is considering setting up a third facility in the country to scale up operations after the termination of the joint venture between parent company Honda Motor Corporation (HMC) and Hero Honda Motors Limited.
HMSI President and Chief Executive Officer, Shinji Aoyama, said, “We are the number one two wheeler brand in the world and would want to be the number one player in India as well. Our current sales volumes do not reflect the actual demand for our products in the market. Our dealers are not being able to cash in on many potential sales due to constraints in supply. The additional capacity from our second plant too, is expected to be exhausted immediately. We have to set up a third plant to boost volumes in India.”
The company has not finalised a location, but is keen on setting up the third manufacturing unit in southern or western India. “As much as 30 per cent of the demand in the overall two wheeler market is from Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. Together, south and west India represent half our business. It is a natural decision to move south to ensure the speedy delivery of our products,” Aoyama said.
Company executives say according to estimates with dealers, had HMSI met the demand in the market, it could have sold an additional one million units. HMSI’s best-selling product, Honda Activa, alone has the potential to clock in a million units annually, compared with the current 0.70 million units, if production constraints are overcome. Similarly, sales volumes of the CB Shine (125 cc) and the CB Unicorn (150 cc), can also be raised to double their current levels.
HMSI has already invested Rs 500 crore to set up a second facility at Tapukara in Rajasthan. Once the plant is operational in September-October 2011, the combined capacity at the two manufacturing units – the other being at Manesar (Haryana) -- would increase by around 37 per cent to 2.2 million units per year. This would partially bridge the gap with market leader Hero Honda, which has the capacity to roll out 5.2 million units annually. HMSI’s Manesar facility has the capacity to manufacture 1.6 million units per year.
Currently, HMSI products have waiting periods ranging from six weeks to six months. The company takes around seven months to deliver a Honda Activa in south India. It expects to sell 1.6 million two-wheelers in the current financial year, a rise of 26 per cent over the 1.27 million units it sold in the last financial year.
HMSI President and Chief Executive Officer, Shinji Aoyama, said, “We are the number one two wheeler brand in the world and would want to be the number one player in India as well. Our current sales volumes do not reflect the actual demand for our products in the market. Our dealers are not being able to cash in on many potential sales due to constraints in supply. The additional capacity from our second plant too, is expected to be exhausted immediately. We have to set up a third plant to boost volumes in India.”
The company has not finalised a location, but is keen on setting up the third manufacturing unit in southern or western India. “As much as 30 per cent of the demand in the overall two wheeler market is from Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. Together, south and west India represent half our business. It is a natural decision to move south to ensure the speedy delivery of our products,” Aoyama said.
Company executives say according to estimates with dealers, had HMSI met the demand in the market, it could have sold an additional one million units. HMSI’s best-selling product, Honda Activa, alone has the potential to clock in a million units annually, compared with the current 0.70 million units, if production constraints are overcome. Similarly, sales volumes of the CB Shine (125 cc) and the CB Unicorn (150 cc), can also be raised to double their current levels.
HMSI has already invested Rs 500 crore to set up a second facility at Tapukara in Rajasthan. Once the plant is operational in September-October 2011, the combined capacity at the two manufacturing units – the other being at Manesar (Haryana) -- would increase by around 37 per cent to 2.2 million units per year. This would partially bridge the gap with market leader Hero Honda, which has the capacity to roll out 5.2 million units annually. HMSI’s Manesar facility has the capacity to manufacture 1.6 million units per year.
Currently, HMSI products have waiting periods ranging from six weeks to six months. The company takes around seven months to deliver a Honda Activa in south India. It expects to sell 1.6 million two-wheelers in the current financial year, a rise of 26 per cent over the 1.27 million units it sold in the last financial year.
TVS Motors to decide on price hike by month-end
Leading two wheeler-maker TVS Motor Company today said it is reviewing the movement of raw material prices and will take a decision on increasing the rates of its products by the end of this month.
“The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” the TVS Motor Company President (Marketing), Mr H.S. Goindi, told reporters here today.
The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
“We do review the prices in every quarter... Of course our margins are gradually improving,” Mr. Goindi said, without giving any details.
The Chennai—based two-wheeler major today launched its premium ‘Apache RTR 180’ bike with anti-lock braking system (ABS) technology, priced at Rs 78,880 (ex showroom Delhi).
“This is the first Indian two-wheeler which has come with an ABS. This will enhance our brand value,” he said.
“The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” the TVS Motor Company President (Marketing), Mr H.S. Goindi, told reporters here today.
The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
“We do review the prices in every quarter... Of course our margins are gradually improving,” Mr. Goindi said, without giving any details.
The Chennai—based two-wheeler major today launched its premium ‘Apache RTR 180’ bike with anti-lock braking system (ABS) technology, priced at Rs 78,880 (ex showroom Delhi).
“This is the first Indian two-wheeler which has come with an ABS. This will enhance our brand value,” he said.
TVS Motors to re-enter electric scooters market
TVS Motors on Friday said it was planning to re-enter the electric scooters market in the next financial year. The company has already developed an electric variant of Scooty Teenz, along with another new product for the domestic market.
H S Goindi, president (marketing), TVS Motors said, “We are testing 50 electric scooters in towns across the country. Depending on the feedback, the scooters will be launched sometime in the next financial year.”
The scooters would be rolled out from the company’s facility in Mysore and the company would initially use lead acid batteries for the electric scooters. “Business in electric scooters picked up in India a few years back, but dropped due to issues with battery technology and the withdrawal of subsidies. There is potential in the market, with the government announcing a national mission for promoting electric and hybrid vehicles. We see some proportion of sales coming from this segment over the next five years,” Goindi said.
In April 2008, TVS Motors had launched the ‘Scooty Teenz Electric’, for which the company targeted sales of around 40,000 units per year. However, it stopped production in May 2009, as the product received a lukewarm response.
Goindi said TVS Motors is studying the impact of the rise in commodity prices on the company’s margins and a decision on price rise is likely to be taken next month.
Meanwhile, the company on Friday launched its premium bike, ‘Apache RTR 180’, which boasts of anti-lock braking system technology and is priced at Rs 78,880 (ex-showroom, Delhi).
H S Goindi, president (marketing), TVS Motors said, “We are testing 50 electric scooters in towns across the country. Depending on the feedback, the scooters will be launched sometime in the next financial year.”
The scooters would be rolled out from the company’s facility in Mysore and the company would initially use lead acid batteries for the electric scooters. “Business in electric scooters picked up in India a few years back, but dropped due to issues with battery technology and the withdrawal of subsidies. There is potential in the market, with the government announcing a national mission for promoting electric and hybrid vehicles. We see some proportion of sales coming from this segment over the next five years,” Goindi said.
In April 2008, TVS Motors had launched the ‘Scooty Teenz Electric’, for which the company targeted sales of around 40,000 units per year. However, it stopped production in May 2009, as the product received a lukewarm response.
Goindi said TVS Motors is studying the impact of the rise in commodity prices on the company’s margins and a decision on price rise is likely to be taken next month.
Meanwhile, the company on Friday launched its premium bike, ‘Apache RTR 180’, which boasts of anti-lock braking system technology and is priced at Rs 78,880 (ex-showroom, Delhi).
Honda Exit Process Fails to Ignite Passions for Co
The entire process of Honda exiting from the Indian listed joint venture Hero Honda appears to be opaque, with sketchy details emerging on this transaction. In the latest development, the Munjal family controlled Hero Investments will buy out the 26% stake held by the Japanese company in Hero Honda at Rs 740 per share, or nearly half of the stock’s current price.
From the perspective of the minority shareholder in Hero Honda , it once again raises several unanswered questions, as to the rationale for the Japanese player to exit at such a steep discount and its potential impact on the listed entity’s stock price, in the near term.
Earlier, in mid-December 10, when Honda announced its formal decision to exit this joint venture, there remained several unanswered questions too, especially relating to the royalty structure, going forward . Hero Honda’s royalty and technical fees to its Japanese parents amounted to 2.6% of its net sales of .Rs 15,758 crore for the year ended March 10.
Media reports indicate that the royalty payments for the Indian entity should not rise substantially, going forward, but that may not be sufficient to assuage investor concerns for this stock in the near term. And that’s because the operating profit margins of Hero Honda in the first nine months of current financial year declined 530 basis points year-on-year to 12.2%.
In addition, Hero Honda’s operating margins were substantially lower than the nearest rival during this period. Apart from that, the exit of Honda would require the Indian listed entity to substantially boost its R&D costs, in a bid to remain competitive, and that could hurt Hero Honda’s operating margins in the short term. The Hero Honda stock had hit a 52-week low of Rs 1,377 in late February, and has recovered some ground since then. Although, the time period is not strictly comparable nor the operating environment, but a leading two-wheeler manufacturer in the South had also separated from its Japanese partner in late 2001.
Clearly, from the perspective of the minority shareholder of Hero Honda, they would be hoping that their company would also grow aggressively in the medium term. Besides, there is considerable interest on the Street regarding the price at which private equity players would acquire a stake in the unlisted entity, controlled by the Munjal family, in a bid to help finance the exit of Honda.
From the perspective of the minority shareholder in Hero Honda , it once again raises several unanswered questions, as to the rationale for the Japanese player to exit at such a steep discount and its potential impact on the listed entity’s stock price, in the near term.
Earlier, in mid-December 10, when Honda announced its formal decision to exit this joint venture, there remained several unanswered questions too, especially relating to the royalty structure, going forward . Hero Honda’s royalty and technical fees to its Japanese parents amounted to 2.6% of its net sales of .Rs 15,758 crore for the year ended March 10.
Media reports indicate that the royalty payments for the Indian entity should not rise substantially, going forward, but that may not be sufficient to assuage investor concerns for this stock in the near term. And that’s because the operating profit margins of Hero Honda in the first nine months of current financial year declined 530 basis points year-on-year to 12.2%.
In addition, Hero Honda’s operating margins were substantially lower than the nearest rival during this period. Apart from that, the exit of Honda would require the Indian listed entity to substantially boost its R&D costs, in a bid to remain competitive, and that could hurt Hero Honda’s operating margins in the short term. The Hero Honda stock had hit a 52-week low of Rs 1,377 in late February, and has recovered some ground since then. Although, the time period is not strictly comparable nor the operating environment, but a leading two-wheeler manufacturer in the South had also separated from its Japanese partner in late 2001.
Clearly, from the perspective of the minority shareholder of Hero Honda, they would be hoping that their company would also grow aggressively in the medium term. Besides, there is considerable interest on the Street regarding the price at which private equity players would acquire a stake in the unlisted entity, controlled by the Munjal family, in a bid to help finance the exit of Honda.
Honda gearing up to drop Munjal vendors
Japans Honda may reduce its dependence on Munjal-family owned component companies which currently supply parts to both Hero Honda and Honda Motorcycle & Scooter India (HMSI).
Following its separation with Hero,Honda is restrategising its vendor policy to build its own supplier network independent of the Hero group in India.Sources in the auto industry say Honda is doing this both to derisk its business model and for intellectual property issues.
In an email reply to a query from TOI,Takashi Nagai,head,south west Asia,Honda Motor Co,said: We are currently in the process of reviewing various aspects of our two-wheeler business strategy including supplier network,dealer network and other functions.However since no concrete decisions have been taken yet,we are unable to share any specific information as of now.
Sources say Hero Honda has five vendors as joint ventures or associate companies,from which it gets the bulk of its components.These are Munjal Showa,AG Industries,Sunbeam Auto,Rockman Industries and Satyam Auto Components.In all,it sources components from over 300 suppliers.Many of these Munjal-family owned component companies also supply to HMSI,Hondas 100% subsidiary in India.
Hero Honda maintained that for its part it will continue sourcing from Honda subsidiaries as long as it makes business sense.The amount of business that Hero Honda gives its vendors is phenomenal because motorcycles is a volume game, said Hero Honda CFO Ravi Sud.
As an example he cited the case of carburetor maker Keihin,a 100% Honda subsidiary.We source 5 million units from them every year,"says Sud.When asked if Honda is likely to shift sourcing loyalties,he said,"All transactions with Munjal family-owned component companies are at arms length and they get no preferential treatment.
Hondas decision to build its own capability in sourcing is understandable.After it centralised all parts sourcing in India under Honda Motor India,Honda repeatedly requested Hero Honda to join the umbrella company.But the latter resolutely refused.
Following the split,Hero Honda has announced it will build capability to develop and launch its own range.Honda for its part wants to build strength in the area where Hero is the strongest vendor sourcing and distribution given that it is planning to launch a 100 cc bike in the Splendor /Passion category soon.
The Hero group itself has carved out its businesses between family members as part of a family settlement.While B M Lall and his family now own Hero Honda others like B M Lalls brother Satyanand Munjals son Yogesh Munjal controls Munjal Showa while Ashok Munjal,son of late Dayanand Munjal,BM Lalls older brother,controls Sunbeam Auto.
Yogesh Munjal of Munjal Showa told TOI: Its true there is no assurance from Honda (on continuing the sourcing relationship after the separation) but theres also nothing to the contrary to say that the relationship with HMSI will not continue.
Auto analysts believe that with a full-blown head-to-head competition in Hero Hondas bread and butter 100cc segment right round the corner,Honda may not want to depend too much on Munjal family owned companies.
However,any dissociation will take time given that Hero Honda dominates most of the vendors in the two-wheeler business right now.Honda will take time to build its own supplier network and till then they will need to depend on the current vendors, says a principal with a Delhi-based MNC consultancy firm.
Solo Powered
Following its separation with Hero,Honda is restrategising its vendor policy to build its own supplier network independent of the Hero group in India
Honda is doing this both to derisk its business model and for intellectual property issues
These are Munjal Showa,AG Industries,Sunbeam Auto,Rockman Industries and Satyam Auto Components
Following its separation with Hero,Honda is restrategising its vendor policy to build its own supplier network independent of the Hero group in India.Sources in the auto industry say Honda is doing this both to derisk its business model and for intellectual property issues.
In an email reply to a query from TOI,Takashi Nagai,head,south west Asia,Honda Motor Co,said: We are currently in the process of reviewing various aspects of our two-wheeler business strategy including supplier network,dealer network and other functions.However since no concrete decisions have been taken yet,we are unable to share any specific information as of now.
Sources say Hero Honda has five vendors as joint ventures or associate companies,from which it gets the bulk of its components.These are Munjal Showa,AG Industries,Sunbeam Auto,Rockman Industries and Satyam Auto Components.In all,it sources components from over 300 suppliers.Many of these Munjal-family owned component companies also supply to HMSI,Hondas 100% subsidiary in India.
Hero Honda maintained that for its part it will continue sourcing from Honda subsidiaries as long as it makes business sense.The amount of business that Hero Honda gives its vendors is phenomenal because motorcycles is a volume game, said Hero Honda CFO Ravi Sud.
As an example he cited the case of carburetor maker Keihin,a 100% Honda subsidiary.We source 5 million units from them every year,"says Sud.When asked if Honda is likely to shift sourcing loyalties,he said,"All transactions with Munjal family-owned component companies are at arms length and they get no preferential treatment.
Hondas decision to build its own capability in sourcing is understandable.After it centralised all parts sourcing in India under Honda Motor India,Honda repeatedly requested Hero Honda to join the umbrella company.But the latter resolutely refused.
Following the split,Hero Honda has announced it will build capability to develop and launch its own range.Honda for its part wants to build strength in the area where Hero is the strongest vendor sourcing and distribution given that it is planning to launch a 100 cc bike in the Splendor /Passion category soon.
The Hero group itself has carved out its businesses between family members as part of a family settlement.While B M Lall and his family now own Hero Honda others like B M Lalls brother Satyanand Munjals son Yogesh Munjal controls Munjal Showa while Ashok Munjal,son of late Dayanand Munjal,BM Lalls older brother,controls Sunbeam Auto.
Yogesh Munjal of Munjal Showa told TOI: Its true there is no assurance from Honda (on continuing the sourcing relationship after the separation) but theres also nothing to the contrary to say that the relationship with HMSI will not continue.
Auto analysts believe that with a full-blown head-to-head competition in Hero Hondas bread and butter 100cc segment right round the corner,Honda may not want to depend too much on Munjal family owned companies.
However,any dissociation will take time given that Hero Honda dominates most of the vendors in the two-wheeler business right now.Honda will take time to build its own supplier network and till then they will need to depend on the current vendors, says a principal with a Delhi-based MNC consultancy firm.
Solo Powered
Following its separation with Hero,Honda is restrategising its vendor policy to build its own supplier network independent of the Hero group in India
Honda is doing this both to derisk its business model and for intellectual property issues
These are Munjal Showa,AG Industries,Sunbeam Auto,Rockman Industries and Satyam Auto Components
Siam: New CKD definition will hurt high-end players
The Society of Indian Automobile Manufacturers today said the new definition for completely knocked down (CKD) units of vehicles introduced in the Budget for 2011-12 will significantly increase the cost for high-end players and also hamper the introduction of new products.
Stating that there is a lack of clarity on the issue, SIAM Director-General Vishnu Mathur said the industry body has met Finance Ministry officials to resolve the issue.
"The way we read the English language, (as per the new CKD definition) we have to assemble engines, transmission and gear boxes locally. This is commercially unviable for very low volume products," Mathur said.
For the high-end segment, this will not only "significantly increase the cost", but it will also become "difficult for them to introduce new products", he added.
In the Budget for 2011-12, Finance Minister Pranab Mukherjee had redefined the meaning of completely knocked down (CKD) units, ostensibly to encourage local production of automobiles, which may alter the rate of customs duty on different imported parts.
"A definition for 'CKD unit' of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts or sub-assemblies is installed," the Budget document read.
Currently, luxury segment players including BMW, Mercedes Benz and Audi rely heavily on the imported CKD route to sell their products in India.
CKD units attract a basic customs duty of 10%, over and above other levies of about 30%, which takes the total duty to about 40%.
Mathur said SIAM is hopeful that the government will take a positive note of the industry's representation to the government.
Yesterday, German luxury car-maker Audi had said that if the new CKD norms were to be applied, it may have to alter its business strategy in India, including lying low in the Indian market.
Stating that there is a lack of clarity on the issue, SIAM Director-General Vishnu Mathur said the industry body has met Finance Ministry officials to resolve the issue.
"The way we read the English language, (as per the new CKD definition) we have to assemble engines, transmission and gear boxes locally. This is commercially unviable for very low volume products," Mathur said.
For the high-end segment, this will not only "significantly increase the cost", but it will also become "difficult for them to introduce new products", he added.
In the Budget for 2011-12, Finance Minister Pranab Mukherjee had redefined the meaning of completely knocked down (CKD) units, ostensibly to encourage local production of automobiles, which may alter the rate of customs duty on different imported parts.
"A definition for 'CKD unit' of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts or sub-assemblies is installed," the Budget document read.
Currently, luxury segment players including BMW, Mercedes Benz and Audi rely heavily on the imported CKD route to sell their products in India.
CKD units attract a basic customs duty of 10%, over and above other levies of about 30%, which takes the total duty to about 40%.
Mathur said SIAM is hopeful that the government will take a positive note of the industry's representation to the government.
Yesterday, German luxury car-maker Audi had said that if the new CKD norms were to be applied, it may have to alter its business strategy in India, including lying low in the Indian market.
Surging auto sales may slow down
Despite steadily rising fuel prices ever since decontrol was introduced, sales of cars have shown a relentless surge month after month. Indian automakers are confident that the industry will continue to see double-digit growth of about 15 per cent on the back of favourable income growth outlook, even though a report by Barclays Capital Research also said the recent acceleration in automobile sales in China, India and North Asia is unlikely to sustain due to increase in borrowing costs and oil prices.
In India, cars and two-wheelers have so far defied the factors cited in the Barclays report and grown at a phenomenal 27 per cent in 2010. This has been followed by another 27 per cent growth in January 2011, and figures released on Wednesday showed a surge of 23 per cent in February with domestic demand remaining buoyant on the back of positive consumer sentiment. However, pre-budget buying to avoid a likely increase in excise duty in the Union budget 2011-12 was also partially responsible for the strong growth.
“If we look at the momentum and rate of growth, they have certainly been coming down. Overall, rising borrowing rates, tight liquidity conditions and higher fuel costs would mean auto sales are likely to moderate if the situation persists for a sustained period,” Rahul Bajoria of Barclays Capital told Financial Chronicle.
“Obviously there will be some economic events that will slow things in the coming months and normal economic or business cycle will take hold. But India and China are highly under-motorised nations unlike Japan, which is highly saturated as far as automobiles are concerned. Roads are getting developed in India and China. So long as the road development happens, there will still be good number of vehicle production,” said Shekar Viswanathan, deputy MD - commercial, Toyota Kirloskar Motor.
“Despite increasing interest rates and oil prices, we will continue to see some growth but it will not be of the same magnitude which we saw in the past couple of years. Overall, there is need for motorisation in India as several parts of the country are underdeveloped and it will continue to drive vehicle production,” he added.
Gasoline prices have risen by as much as 13 per cent since June 2010 (Rs 51.43) to Rs 58.37 now. Interest rate on car loans from public sector banks like State Bank of India have increased to 9 per cent while it has increased to 11.5-12 per cent in the case of private banks like HDFC and ICICI since June 2010 when it was 9-10 per cent.
SBI had first reduced the interest rate to 8 per cent in February 2009, a time when car sales had been dipping between September 2008 and January 2009. This, along with the excise duty on small cars being reduced to 8 per cent from 12 per cent and to 20 per cent from 24 per cent on bigger cars from January, made the auto industry drive back to the growth trajectory and there has been no looking back.
However, as demand started picking up in 2009, post this stimulus, the government rolled back excise duty by 2 per cent in the budget for 2009-10, resulting in a duty of 10 per cent on small cars and 20 per cent on bigger cars. Even this couldn’t put a brake on car sales. Car sales grew 30 per cent to 1,788,503 units between April and February, according to Siam data released on Wednesday. In February, car sales touched a record high of 189,008 units, up 23 per cent from the year ago period.
“The acceleration in auto sales may be shortlived. Tighter monetary conditions on the back of inflation worries coupled with higher oil prices could slow the recent acceleration in auto sales in Asia despite strong wage growth in the region. The risk of a slowdown is higher in China, India and North Asia due to reduced credit availability and higher oil dependency,” according to the Barclays report.
P Balendran, VP, General Motors India, also said that the growth would moderate in the coming years. “Credit availability is comfortable as of now but the cost of finance has become dearer in recent months, which is a dampener and has the potential to bring the market sentiments down. Any hike in interest rate slows down the market. Now with petrol prices going up and banks increasing interest rates at regular intervals following RBI’s bid to contain the growing inflation, the market is expected to slow down in the coming months. The crisis in West Asia has made the situation further volatile. “We still expect the market to register double-digit growth say between 14-16 per cent this year against over last year’s 30 per cent growth ,” he added.
“The present growth rate of about 30 per cent is definitely not sustainable in the passenger car segment. However, we are bullish on the demand and will see strong double-digit growth at about 15 per cent in the coming years,” according to Arvind Saxena, director - marketing, Hyundai Motor India.
However, Vishnu Mathur, director general, SIAM, raised concerns. “The month-on-month sales are not coming down, but there is a moderation in growth taking place. So far, the growth was 30 per cent in the financial year but in February it was 23 per cent. The base has been growing, so growth rate will moderate in future.”
Sales are happening because of rising incomes of the middle class, which forms a major chunk of the population. People usually spend their first disposable income on buying a vehicle. Most Indians are yet to buy a vehicle, with the car penetration level at a low 14 per 1,000 people.
Maruti Suzuki feels that though car sales are increasing on a monthly basis, the slowing down of the growth pace (percentage) is a concern. “The numbers we look at are wholesale data (dispatches from factories to dealers) and not retail data (actual sales at dealerships). In December, the industry hardly had any inventories, as the industry didn’t anticipate such an increase in demand last year. However, retail sales are not really happening at a brisk pace and thus stocks would have gone up at the dealers’ end. This is the reason why we fear that the industry growth will taper down because of high base effect, fuel price rise and higher interest rates. However, the sentiment remains strong with strong economic growth fuelling purchases,” said Shashank Srivastava, chief general manager (marketing), Maruti Suzuki India.
While S Sridhar, CEO - two wheelers, Bajaj Auto India, stated that tighter monetary measures and higher oil prices along with raising commodities prices would moderate the growth rate of the auto industry, HS Goindi. president - marketing, TVS Motor, said the growth in coming years would not be the same as in previous years. While the two-wheeler industry grew at a CAGR of 10-12 per cent over the last 10 years, we may expect a CAGR of 14-16 per cent over the next few years. Increasing interest rates and higher oil prices will not have any big impact on the two-wheeler segment. As long as the economy grows, we will also see some strong growth,” said Goindi.
In India, cars and two-wheelers have so far defied the factors cited in the Barclays report and grown at a phenomenal 27 per cent in 2010. This has been followed by another 27 per cent growth in January 2011, and figures released on Wednesday showed a surge of 23 per cent in February with domestic demand remaining buoyant on the back of positive consumer sentiment. However, pre-budget buying to avoid a likely increase in excise duty in the Union budget 2011-12 was also partially responsible for the strong growth.
“If we look at the momentum and rate of growth, they have certainly been coming down. Overall, rising borrowing rates, tight liquidity conditions and higher fuel costs would mean auto sales are likely to moderate if the situation persists for a sustained period,” Rahul Bajoria of Barclays Capital told Financial Chronicle.
“Obviously there will be some economic events that will slow things in the coming months and normal economic or business cycle will take hold. But India and China are highly under-motorised nations unlike Japan, which is highly saturated as far as automobiles are concerned. Roads are getting developed in India and China. So long as the road development happens, there will still be good number of vehicle production,” said Shekar Viswanathan, deputy MD - commercial, Toyota Kirloskar Motor.
“Despite increasing interest rates and oil prices, we will continue to see some growth but it will not be of the same magnitude which we saw in the past couple of years. Overall, there is need for motorisation in India as several parts of the country are underdeveloped and it will continue to drive vehicle production,” he added.
Gasoline prices have risen by as much as 13 per cent since June 2010 (Rs 51.43) to Rs 58.37 now. Interest rate on car loans from public sector banks like State Bank of India have increased to 9 per cent while it has increased to 11.5-12 per cent in the case of private banks like HDFC and ICICI since June 2010 when it was 9-10 per cent.
SBI had first reduced the interest rate to 8 per cent in February 2009, a time when car sales had been dipping between September 2008 and January 2009. This, along with the excise duty on small cars being reduced to 8 per cent from 12 per cent and to 20 per cent from 24 per cent on bigger cars from January, made the auto industry drive back to the growth trajectory and there has been no looking back.
However, as demand started picking up in 2009, post this stimulus, the government rolled back excise duty by 2 per cent in the budget for 2009-10, resulting in a duty of 10 per cent on small cars and 20 per cent on bigger cars. Even this couldn’t put a brake on car sales. Car sales grew 30 per cent to 1,788,503 units between April and February, according to Siam data released on Wednesday. In February, car sales touched a record high of 189,008 units, up 23 per cent from the year ago period.
“The acceleration in auto sales may be shortlived. Tighter monetary conditions on the back of inflation worries coupled with higher oil prices could slow the recent acceleration in auto sales in Asia despite strong wage growth in the region. The risk of a slowdown is higher in China, India and North Asia due to reduced credit availability and higher oil dependency,” according to the Barclays report.
P Balendran, VP, General Motors India, also said that the growth would moderate in the coming years. “Credit availability is comfortable as of now but the cost of finance has become dearer in recent months, which is a dampener and has the potential to bring the market sentiments down. Any hike in interest rate slows down the market. Now with petrol prices going up and banks increasing interest rates at regular intervals following RBI’s bid to contain the growing inflation, the market is expected to slow down in the coming months. The crisis in West Asia has made the situation further volatile. “We still expect the market to register double-digit growth say between 14-16 per cent this year against over last year’s 30 per cent growth ,” he added.
“The present growth rate of about 30 per cent is definitely not sustainable in the passenger car segment. However, we are bullish on the demand and will see strong double-digit growth at about 15 per cent in the coming years,” according to Arvind Saxena, director - marketing, Hyundai Motor India.
However, Vishnu Mathur, director general, SIAM, raised concerns. “The month-on-month sales are not coming down, but there is a moderation in growth taking place. So far, the growth was 30 per cent in the financial year but in February it was 23 per cent. The base has been growing, so growth rate will moderate in future.”
Sales are happening because of rising incomes of the middle class, which forms a major chunk of the population. People usually spend their first disposable income on buying a vehicle. Most Indians are yet to buy a vehicle, with the car penetration level at a low 14 per 1,000 people.
Maruti Suzuki feels that though car sales are increasing on a monthly basis, the slowing down of the growth pace (percentage) is a concern. “The numbers we look at are wholesale data (dispatches from factories to dealers) and not retail data (actual sales at dealerships). In December, the industry hardly had any inventories, as the industry didn’t anticipate such an increase in demand last year. However, retail sales are not really happening at a brisk pace and thus stocks would have gone up at the dealers’ end. This is the reason why we fear that the industry growth will taper down because of high base effect, fuel price rise and higher interest rates. However, the sentiment remains strong with strong economic growth fuelling purchases,” said Shashank Srivastava, chief general manager (marketing), Maruti Suzuki India.
While S Sridhar, CEO - two wheelers, Bajaj Auto India, stated that tighter monetary measures and higher oil prices along with raising commodities prices would moderate the growth rate of the auto industry, HS Goindi. president - marketing, TVS Motor, said the growth in coming years would not be the same as in previous years. While the two-wheeler industry grew at a CAGR of 10-12 per cent over the last 10 years, we may expect a CAGR of 14-16 per cent over the next few years. Increasing interest rates and higher oil prices will not have any big impact on the two-wheeler segment. As long as the economy grows, we will also see some strong growth,” said Goindi.
Automobile stocks may gain as domestic demand remains firm
Auto makers continued their robust performance in February on the back of strong domestic demand supported by positive consumer sentiment.
Pre-budget buying to avoid an expected hike of excise duty in Budget 2011 was also partially responsible for last month’s strong performance. Among the bigger firms, Mahindra and Mahindra Ltd (M&M), Hero Honda Motors Ltd and TVS Motor Co. Ltd reported better than expected volumes for February. Overall, growth momentum in sales was maintained. Going forward, however, increase in the fuel price along with higher interest rates may affect their performance.
Tata Motors Ltd reported 11.7% year-on-year (y-o-y) growth in volumes in February, led by 16.3% y-o-y growth in the passenger vehicles (PV) and modest 8.6% y-o-y growth in the commercial vehicles (CV) segments. In the PV segment, the company reported total offtake of 32,169 units, driven by 101.3% y-o-y increase in Tata Nano volumes and 21.6% y-o-y increase in Indigo volumes.
In the CV space, total volumes stood at 45,374 units with the medium and heavy commercial vehicles and light commercial vehicle segments registering 3.8% and 12.4% y-o-y growth, respectively.
Maruti Suzuki India Ltd reported a robust sales clocking volume growth of 15.5% y-o-y to 1,11,645 units led by strong momentum in the domestic market.
During the month, domestic volumes increased 19.8% y-o-y to 101,543 units. However, exports continued the downward trend, posting 15% y-o-y decline to 10,102 units. Maruti Suzuki maintained a strong volume momentum in the A2, A3 and C segments, posting 19.4%, 27.0% and 26.9% y-o-y growth, respectively. The company also launched Kizashi, a luxury sedan in the A4 segment.
M&M registered strong volume growth of 25.4% y-o-y to 52,419 units aided by a robust 36.8% y-o-y growth in tractor sales to 19,041 units and 19.7% y-o-y growth in automotive sales to 33,378 units.
Within the automotive segment, the four-wheeler pickup segment grew 13.4% y-o-y on the back of strong performance by Gio and Maxximo brands. Logan sales continued its upward momentum, registering 114.3% y-o-y growth. The three-wheeler segment registered 57.2% y-o-y growth.
Two- and three-wheelers
Bajaj Auto Ltd reported 21.7% y-o-y growth in line with our estimates, with motorcycle sales registering a growth of 22.2% y-o-y and three-wheeler sales posting better-than-ex-pected 18.4% y-o-y growth as a result of ease in capacity constraints. Hero Honda Motors registered a slightly better-than-expected 23.5% y-o-y growth in sales to 472,055 units, led by a refreshedproduct range and vehicle launches. TVS Motor Co. reported marginally better-than-expected 24.3% y-o-y sales growth led by an impressive 49.3% y-o-y growth in scooter sales.
Outlook
We remain positive on the Indian auto sector. Overall, we estimate auto volumes to register 13% compounded annual growth rate over FY10-12 aided by an improved business environment for the sector. Over the long term, comparatively low penetration levels, a healthy economic environment and favourable demographics supported by higher per capita income levels are likely to help auto makers in sustaining their revenue growth.
Pre-budget buying to avoid an expected hike of excise duty in Budget 2011 was also partially responsible for last month’s strong performance. Among the bigger firms, Mahindra and Mahindra Ltd (M&M), Hero Honda Motors Ltd and TVS Motor Co. Ltd reported better than expected volumes for February. Overall, growth momentum in sales was maintained. Going forward, however, increase in the fuel price along with higher interest rates may affect their performance.
Tata Motors Ltd reported 11.7% year-on-year (y-o-y) growth in volumes in February, led by 16.3% y-o-y growth in the passenger vehicles (PV) and modest 8.6% y-o-y growth in the commercial vehicles (CV) segments. In the PV segment, the company reported total offtake of 32,169 units, driven by 101.3% y-o-y increase in Tata Nano volumes and 21.6% y-o-y increase in Indigo volumes.
In the CV space, total volumes stood at 45,374 units with the medium and heavy commercial vehicles and light commercial vehicle segments registering 3.8% and 12.4% y-o-y growth, respectively.
Maruti Suzuki India Ltd reported a robust sales clocking volume growth of 15.5% y-o-y to 1,11,645 units led by strong momentum in the domestic market.
During the month, domestic volumes increased 19.8% y-o-y to 101,543 units. However, exports continued the downward trend, posting 15% y-o-y decline to 10,102 units. Maruti Suzuki maintained a strong volume momentum in the A2, A3 and C segments, posting 19.4%, 27.0% and 26.9% y-o-y growth, respectively. The company also launched Kizashi, a luxury sedan in the A4 segment.
M&M registered strong volume growth of 25.4% y-o-y to 52,419 units aided by a robust 36.8% y-o-y growth in tractor sales to 19,041 units and 19.7% y-o-y growth in automotive sales to 33,378 units.
Within the automotive segment, the four-wheeler pickup segment grew 13.4% y-o-y on the back of strong performance by Gio and Maxximo brands. Logan sales continued its upward momentum, registering 114.3% y-o-y growth. The three-wheeler segment registered 57.2% y-o-y growth.
Two- and three-wheelers
Bajaj Auto Ltd reported 21.7% y-o-y growth in line with our estimates, with motorcycle sales registering a growth of 22.2% y-o-y and three-wheeler sales posting better-than-ex-pected 18.4% y-o-y growth as a result of ease in capacity constraints. Hero Honda Motors registered a slightly better-than-expected 23.5% y-o-y growth in sales to 472,055 units, led by a refreshedproduct range and vehicle launches. TVS Motor Co. reported marginally better-than-expected 24.3% y-o-y sales growth led by an impressive 49.3% y-o-y growth in scooter sales.
Outlook
We remain positive on the Indian auto sector. Overall, we estimate auto volumes to register 13% compounded annual growth rate over FY10-12 aided by an improved business environment for the sector. Over the long term, comparatively low penetration levels, a healthy economic environment and favourable demographics supported by higher per capita income levels are likely to help auto makers in sustaining their revenue growth.
Bike makers rev up launch plans for premium models
Honda, Bajaj, Yamaha and Mahindra are revving launch plans for the 200cc and above notorcycle segment. Honda Motorcycle and Scooter India, the country's fourth largest two-wheeler producer, will be first off. It plans to launch the CBR 250 next month, at a price tag of around Rs 1.5 lakh (ex-showroom Delhi).The Japanese subsidiary has already started accepting bookings and got 2,500. Delivery of the CBR 250, whose cost will be on par with the entry-level model of Tata's Nano car, will start by the end of April, stated a senior executive of the company.
Naresh Rattan, operating head of sales and marketing for HMSI, said: "The initial response for the CBR 250 is very encouraging. We are on track for launching in April." The engine and most other components are being made locally. HMSI hopes to sell 30,000 units of the bike in the first 12 months after the launch.
The segment where Honda plans to sell this premium bike is presently dominated by Bajaj, Royal Enfield and Hero Honda. Although the segment is small, with sales of around 160,000 units a year, it is growing in high double-digits, say industry players. Thus, it has attracted others, too.
Bajaj Auto, India's second biggest bike maker, will launch the Duke 200 later this year. This has been developed in association with its Austrian partner, KTM Power Sports AG, where Bajaj holds 38 per cent stake. The Pune-based company had plans of launching the 125cc version of the bike before deciding against it last year. Bajaj is expected to price the bike in the same space as Honda's CBR 250.
Rajiv Bajaj, managing director, stated the cost of manufacturing the Duke 200 would bevery similar to the Duke 125. KTM is to remain a premium brand as compared to Bajaj, which would continue to be the more mass-market one in the domestic market.
Mahindra 2 Wheelers, from the Mahindra Group, has rescheduled the launch of its Mojo motorcycle, a 300cc performance touring bike, in the second half of this year. It was initially supposed to go on sale in January but had to be upgraded with technology inputs and added features. There would, however, be no rise in the price of the vehicle, which was nearly Rs 1.8 lakh, stated a senior official from the company.
Yamaha, the Japanese motorcycle maker, will launch a 250cc version of one of its bikes before the end of this year. Hero Honda Karizma, the only performance bike from the market leader, sees sales of 2,500-3,500 units per month. The Pulsar 220 from Bajaj sells 5,000-5,500 units every month.
The Kawasaki Ninja 250, assembled at the Chakan, Pune, facility of Bajaj, records sales of 40-50 units per month. Bajaj has priced its Pulsar 220 at around Rs 70,000, while the Karizma ZMR is sold for nearly Rs 100,000 each. The Yamaha R15, a 150cc motorcycle, is the most costly bike in its class and sold for a little more than Rs 110,000. About 2,000 units of the bike are sold every month.
Naresh Rattan, operating head of sales and marketing for HMSI, said: "The initial response for the CBR 250 is very encouraging. We are on track for launching in April." The engine and most other components are being made locally. HMSI hopes to sell 30,000 units of the bike in the first 12 months after the launch.
The segment where Honda plans to sell this premium bike is presently dominated by Bajaj, Royal Enfield and Hero Honda. Although the segment is small, with sales of around 160,000 units a year, it is growing in high double-digits, say industry players. Thus, it has attracted others, too.
Bajaj Auto, India's second biggest bike maker, will launch the Duke 200 later this year. This has been developed in association with its Austrian partner, KTM Power Sports AG, where Bajaj holds 38 per cent stake. The Pune-based company had plans of launching the 125cc version of the bike before deciding against it last year. Bajaj is expected to price the bike in the same space as Honda's CBR 250.
Rajiv Bajaj, managing director, stated the cost of manufacturing the Duke 200 would bevery similar to the Duke 125. KTM is to remain a premium brand as compared to Bajaj, which would continue to be the more mass-market one in the domestic market.
Mahindra 2 Wheelers, from the Mahindra Group, has rescheduled the launch of its Mojo motorcycle, a 300cc performance touring bike, in the second half of this year. It was initially supposed to go on sale in January but had to be upgraded with technology inputs and added features. There would, however, be no rise in the price of the vehicle, which was nearly Rs 1.8 lakh, stated a senior official from the company.
Yamaha, the Japanese motorcycle maker, will launch a 250cc version of one of its bikes before the end of this year. Hero Honda Karizma, the only performance bike from the market leader, sees sales of 2,500-3,500 units per month. The Pulsar 220 from Bajaj sells 5,000-5,500 units every month.
The Kawasaki Ninja 250, assembled at the Chakan, Pune, facility of Bajaj, records sales of 40-50 units per month. Bajaj has priced its Pulsar 220 at around Rs 70,000, while the Karizma ZMR is sold for nearly Rs 100,000 each. The Yamaha R15, a 150cc motorcycle, is the most costly bike in its class and sold for a little more than Rs 110,000. About 2,000 units of the bike are sold every month.
Honda Motorcycles to step on the gas
After parting with Hero, says it wants to be in top three for all segments.
Honda, the market leader in two-wheelers globally, is to get aggressive in India after its exit from Hero Honda, its joint venture with the Hero Group. Honda Motorcycle & Scooters India (HMSI), its fully-owned arm set up in 1999, plans to launch two new motocycles every year, expand its reach and bring in a new mass market 100cc bike.
“Honda always wants to be in the Number One position. Right now, we are in the fourth position, not very far from the third player. We want to be among the top three players (in India), and very close to the No 2 player,’’ said Shinji Aoyama, President & CEO, HMSI, in an interview to Business Standard last week.
“The short term plans will not be driven by events at Hero Honda but long term, there will be a huge difference. Single-mindedly, the world leader will think differently. Things will change dramatically,’’ said Naresh Rattan, head of marketing & sales, HMSI.
Till now, Honda Motor Company was operating in India through both Hero Honda and HMSI. A joint working group decided on the line of models for both. The ventures were not to disturb each other, but play a complementary role, so that together Honda enjoyed a 60 per cent market share. ‘‘That horizon will change. Honda will bring in more core products now,’’ said a senior Honda executive.
Aoyama said Honda would like to fill the gaps in its portfolio. ‘‘Whatever we didn’t not have in our product portfolio, we would like to fill. For instance, we would like to enter the inexpensive product segment, and bring in a core product in the entry-level 100cc segment. This product will make us really aggressive (in the market),’’ he said. It has a 110cc bike in the Twister, but it’s a niche product targeted at urban youngsters. It is clear that Honda is looking for a more mass market bike.
However, Honda doesn’t believe the time is yet right to get aggressive. Its priority would be to address the huge backlog in orders. None of its bikes are available off-the-shelf and have waiting period from two to three months. Honda’s second factory will come up at Tapukara in Alwar district in Rajasthan by July-August. Aoyama says it will take Honda at least two years to ensure supply matches demand.
Despite its technological strengths—many in the industry believe Honda has the best four-stroke technology—it won’t be easy. It will have to contend with well-entrenched brands like Hero Honda’s Splendor and Passion, and now Bajaj’s Discover. Honda, however, believes it can overcome these with better quality of products and distribution. ‘‘In a decade, we can change the entire market situation,’’ said Aoyama.
He believes the real demand for its products is much more but the short supply makes his dealers miss potential sales. ‘‘We are selling 700,000 units of the Activa a year. If we didn’t have production constraints, we could easily sell a million units. We are selling 300,000 units of the Shine a year, which we can easily double,’’ said Aoyama. HMSI has about 400 dealers and an equal number of service centres. He now plans to add 200 dealers or service centres every year.
HMSI will push exports from India to markets which show a preference for India-made bikes that combine style, mileage and performance. Besides neighbouring countries, it includes markets in Latin America, where Chinese bikes are not preferred. Last year, it exported 75,000 bikes and this is expected to rise to 100,000 bikes this year, 150,000 next year and 200,000 the year after. For now, Africa is not on its radar or mandate, where Bajaj Auto has made significant inroads.
Honda, the market leader in two-wheelers globally, is to get aggressive in India after its exit from Hero Honda, its joint venture with the Hero Group. Honda Motorcycle & Scooters India (HMSI), its fully-owned arm set up in 1999, plans to launch two new motocycles every year, expand its reach and bring in a new mass market 100cc bike.
“Honda always wants to be in the Number One position. Right now, we are in the fourth position, not very far from the third player. We want to be among the top three players (in India), and very close to the No 2 player,’’ said Shinji Aoyama, President & CEO, HMSI, in an interview to Business Standard last week.
“The short term plans will not be driven by events at Hero Honda but long term, there will be a huge difference. Single-mindedly, the world leader will think differently. Things will change dramatically,’’ said Naresh Rattan, head of marketing & sales, HMSI.
Till now, Honda Motor Company was operating in India through both Hero Honda and HMSI. A joint working group decided on the line of models for both. The ventures were not to disturb each other, but play a complementary role, so that together Honda enjoyed a 60 per cent market share. ‘‘That horizon will change. Honda will bring in more core products now,’’ said a senior Honda executive.
Aoyama said Honda would like to fill the gaps in its portfolio. ‘‘Whatever we didn’t not have in our product portfolio, we would like to fill. For instance, we would like to enter the inexpensive product segment, and bring in a core product in the entry-level 100cc segment. This product will make us really aggressive (in the market),’’ he said. It has a 110cc bike in the Twister, but it’s a niche product targeted at urban youngsters. It is clear that Honda is looking for a more mass market bike.
However, Honda doesn’t believe the time is yet right to get aggressive. Its priority would be to address the huge backlog in orders. None of its bikes are available off-the-shelf and have waiting period from two to three months. Honda’s second factory will come up at Tapukara in Alwar district in Rajasthan by July-August. Aoyama says it will take Honda at least two years to ensure supply matches demand.
Despite its technological strengths—many in the industry believe Honda has the best four-stroke technology—it won’t be easy. It will have to contend with well-entrenched brands like Hero Honda’s Splendor and Passion, and now Bajaj’s Discover. Honda, however, believes it can overcome these with better quality of products and distribution. ‘‘In a decade, we can change the entire market situation,’’ said Aoyama.
He believes the real demand for its products is much more but the short supply makes his dealers miss potential sales. ‘‘We are selling 700,000 units of the Activa a year. If we didn’t have production constraints, we could easily sell a million units. We are selling 300,000 units of the Shine a year, which we can easily double,’’ said Aoyama. HMSI has about 400 dealers and an equal number of service centres. He now plans to add 200 dealers or service centres every year.
HMSI will push exports from India to markets which show a preference for India-made bikes that combine style, mileage and performance. Besides neighbouring countries, it includes markets in Latin America, where Chinese bikes are not preferred. Last year, it exported 75,000 bikes and this is expected to rise to 100,000 bikes this year, 150,000 next year and 200,000 the year after. For now, Africa is not on its radar or mandate, where Bajaj Auto has made significant inroads.
Hero is Mumbai Indian's sponser
Last IPL edition's finalists Mumbai Indians today got new sponsors in Hero Honda Motors Ltd , the world's largest two-wheeler manufacturers.
The Mumbai players will sport Hero Honda logo on the front of their jerseys in the fourth edition of the IPL.
Led by legendary Sachin Tendulkar , Mumbai Indians have included explosive Australian all-rounder Andrew Symonds and Indian batsman Rohit Sharma.
"We are happy to partner with Hero Honda, one of the most iconic brands in the automobile space. With our new partner, and inspiring additions to the MI family, we look forward to recreate the magic with Desh Ki Dhadkan hum duniya hila denge," said a Mumbai Indians spokesperson.
A Hero Honda spokesperson said, "It's been home to a world class team which stands for determination, commitment, team spirit and a professional approach. We have been associated with IPL right from the beginning and we are very excited about our partnership with Mumbai Indians."
The Mumbai players will sport Hero Honda logo on the front of their jerseys in the fourth edition of the IPL.
Led by legendary Sachin Tendulkar , Mumbai Indians have included explosive Australian all-rounder Andrew Symonds and Indian batsman Rohit Sharma.
"We are happy to partner with Hero Honda, one of the most iconic brands in the automobile space. With our new partner, and inspiring additions to the MI family, we look forward to recreate the magic with Desh Ki Dhadkan hum duniya hila denge," said a Mumbai Indians spokesperson.
A Hero Honda spokesperson said, "It's been home to a world class team which stands for determination, commitment, team spirit and a professional approach. We have been associated with IPL right from the beginning and we are very excited about our partnership with Mumbai Indians."
Hero Honda's various challenges
The B.M. Munjal-led Hero Group will buy out the 26% stake held by Honda Motor Co. Ltd in Hero Honda Motors Ltd at Rs739.97 per share—a massive 50% discount to the market price. This is also considerably lower than the price of Rs1,200 that was anticipated by some analysts. Of course, the deal doesn’t have any bearing on the shares of the group flagship Hero Honda Motors, since the shares are being bought by a private company owned by the promoter group.
Hero Investments Pvt. Ltd, which owns about 17.3% of Hero Honda’s shares, will buy out the Honda stake. This will give the Hero Group a 52% stake in the company.
While this is a private deal between the two largest shareholders, there were concerns that the deal could have implications for Hero Honda as well. Specifically, there were concerns that there would be a trade-off in terms of higher royalty, or a one-time technology transfer fee from Hero Honda, which would be detrimental to the interest of the minority shareholder. But this concern has been addressed by the Hero Group, stating that the royalty, including that on new products, will remain at around 3% until June 2014.
The Hero Group has also announced that it would place the shares with two private equity (PE) firms. If this stake sale happens at a price that’s considerably lower than the market price, this could affect Hero Honda’s share price.
“We expect that the PE investors will agree to a lock-in period (anywhere between three and five years) and as a protection for the lock-in, the transfer of shares may be at price significantly lower than the current market price,” said a report by Emkay Global Financial Services Ltd.
Meanwhile, in the last few quarters, the company has lost ground; its market share has dropped from 57% to 52%, with its nearest competitor Bajaj Auto Ltd gaining at its expense.
Another challenge is to upgrade technology and stand on its own feet on product development in the absence of its 25-year-old technology partner, Honda. While the company fights these battles, it also has to contend with higher raw material costs.
At the current market price of Rs1,518, Hero Honda trades at about 14 times estimated fiscal 2012 earnings, in line with expected growth rate in sales for the industry over the next two years.
Hero Investments Pvt. Ltd, which owns about 17.3% of Hero Honda’s shares, will buy out the Honda stake. This will give the Hero Group a 52% stake in the company.
While this is a private deal between the two largest shareholders, there were concerns that the deal could have implications for Hero Honda as well. Specifically, there were concerns that there would be a trade-off in terms of higher royalty, or a one-time technology transfer fee from Hero Honda, which would be detrimental to the interest of the minority shareholder. But this concern has been addressed by the Hero Group, stating that the royalty, including that on new products, will remain at around 3% until June 2014.
The Hero Group has also announced that it would place the shares with two private equity (PE) firms. If this stake sale happens at a price that’s considerably lower than the market price, this could affect Hero Honda’s share price.
“We expect that the PE investors will agree to a lock-in period (anywhere between three and five years) and as a protection for the lock-in, the transfer of shares may be at price significantly lower than the current market price,” said a report by Emkay Global Financial Services Ltd.
Meanwhile, in the last few quarters, the company has lost ground; its market share has dropped from 57% to 52%, with its nearest competitor Bajaj Auto Ltd gaining at its expense.
Another challenge is to upgrade technology and stand on its own feet on product development in the absence of its 25-year-old technology partner, Honda. While the company fights these battles, it also has to contend with higher raw material costs.
At the current market price of Rs1,518, Hero Honda trades at about 14 times estimated fiscal 2012 earnings, in line with expected growth rate in sales for the industry over the next two years.
TVS Motor launches Apache RTR 180 with ABS
ENHANCING BRAND VALUE:H. S. Goindi, President (Marketing), TVS Motor, at the launch of India's first motorcycle with ABS, Apache RTR 180, in New Delhi on Friday.
NEW DELHI: The Chennai-based two-wheeler maker TVS Motor Company on Friday launched its premium ‘Apache RTR 180' bike with anti-lock braking system (ABS) technology, priced at Rs.78,880 (ex-showroom Delhi).
“This is the first Indian two-wheeler which has come out with an ABS. This will enhance our brand value,” TVS Motor Company President (Marketing) H. S. Goindi told reporters here.
The company also announced its intention to re-enter the Indian electric scooter market with some existing and new models in the next fiscal.
At present, the company is carrying out test runs of about 50 electric scooters across various towns in the country.
“We are working on introducing electric scooters and these are being experimented for launch. By some time next fiscal, it will come to the market,'' Mr. Goindi said.
About 50 electric scooters, comprising some of its existing and new models, are being tested across the country. “We will launch only scooters in electric mode. The products will initially run on lead acid batteries and later we may develop some other technology,'' he said. The company will produce these new products at its Mysore facility.
Asked about the electric two-wheeler market, Mr. Goindi said: “business in India picked up few years back and also dropped because of variety of issues. Now, subsidy has also been offered, but still it is very sketchy. We feel business will again pick-up.''
TVS had earlier launched electric scooterette ‘Scooty Teenz Electric' in April 2008 with high hopes of selling around 40,000 units a year. However, it stopped the production in May 2009 as it received a lukewarm response from the market.
The company had also shelved its plans to launch electric three-wheelers. The budget for 2011-12 has proposed to set up a National Mission for Hybrid and Electric Vehicles to encourage manufacturing and selling of alternative fuel-based vehicles. It also proposed to cut excise duty on development and manufacturing of hybrid vehicle kits to 5 per cent from the existing 10 per cent, besides fully exempting customs and countervailing duties on import of special hybrid parts. In November last year, the government had announced a Rs.95 crore incentive package for the electric vehicle makers for the remaining part of the XI Plan.
Reviewing input costs
PTI reports:
The company said it was reviewing the movement of raw material prices and would take a decision on increasing the rates of its products by the end of this month. “The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” Mr. Goindi said. The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
NEW DELHI: The Chennai-based two-wheeler maker TVS Motor Company on Friday launched its premium ‘Apache RTR 180' bike with anti-lock braking system (ABS) technology, priced at Rs.78,880 (ex-showroom Delhi).
“This is the first Indian two-wheeler which has come out with an ABS. This will enhance our brand value,” TVS Motor Company President (Marketing) H. S. Goindi told reporters here.
The company also announced its intention to re-enter the Indian electric scooter market with some existing and new models in the next fiscal.
At present, the company is carrying out test runs of about 50 electric scooters across various towns in the country.
“We are working on introducing electric scooters and these are being experimented for launch. By some time next fiscal, it will come to the market,'' Mr. Goindi said.
About 50 electric scooters, comprising some of its existing and new models, are being tested across the country. “We will launch only scooters in electric mode. The products will initially run on lead acid batteries and later we may develop some other technology,'' he said. The company will produce these new products at its Mysore facility.
Asked about the electric two-wheeler market, Mr. Goindi said: “business in India picked up few years back and also dropped because of variety of issues. Now, subsidy has also been offered, but still it is very sketchy. We feel business will again pick-up.''
TVS had earlier launched electric scooterette ‘Scooty Teenz Electric' in April 2008 with high hopes of selling around 40,000 units a year. However, it stopped the production in May 2009 as it received a lukewarm response from the market.
The company had also shelved its plans to launch electric three-wheelers. The budget for 2011-12 has proposed to set up a National Mission for Hybrid and Electric Vehicles to encourage manufacturing and selling of alternative fuel-based vehicles. It also proposed to cut excise duty on development and manufacturing of hybrid vehicle kits to 5 per cent from the existing 10 per cent, besides fully exempting customs and countervailing duties on import of special hybrid parts. In November last year, the government had announced a Rs.95 crore incentive package for the electric vehicle makers for the remaining part of the XI Plan.
Reviewing input costs
PTI reports:
The company said it was reviewing the movement of raw material prices and would take a decision on increasing the rates of its products by the end of this month. “The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” Mr. Goindi said. The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
Karizma sets tone for Hero branding strategy
The sports bike is a product of Hero Honda Motors Ltd, a joint venture of India’s Hero group and Japan’s Honda Motor Co. Ltd.
Under wraps: Promos for the new Karizma ZMR motorcycle from the Hero Group’s stable at the Feroz Shah Kotla Stadium in New Delhi, one of the venues for the ongoing cricket World Cup.
Hero and Honda are parting ways, and the Karizma promos are the first of the Indian group’s new branding strategy as it prepares to go to the market alone after a 26-year partnership.
“This is a part of our long-term strategy,” said Sunil Kant Munjal, chairman of Hero Corporate Services Ltd and a member on the Hero Honda board, when asked about the Karizma ZMR advertisements at the sidelines of a conference on 28 February. “We are not rushing into it.”
Hero Corporate Services is a part of the Hero group.
There is no mention of the company’s name in the Karizma advertisements on billboards or on cricket grounds where the World Cup matches are being played.
The Hero group has previously said it would evolve its own brand after the split and enter overseas markets such as Latin America, Africa and West Asia with a new logo.
“In the new export markets, the Hero brand will be taken forward. We are free to export any model under our brand name,” Anil Dua, senior vice-president (marketing and sales), had said during a conference call with analysts and investors days after the break-up in December. Dua did not answer calls on Wednesday.
Hero Honda, with a line-up of high-selling motorcycles including the Splendour and the Passion, is the top motorcycle maker in the country by sales.
“Gone are the days when your products used to sell just because you had a strong brand. Once Honda goes away from Hero, they will have to keep in mind that it is because of the product that a strong brand is established,” said Abdul Majeed, auto partner, at consulting firm PricewaterhouseCoopers. “In my view, the brand is not Hero Honda but Splendor and Passion; and these will not suffer in the immediate term.”
On Tuesday, the $4-billion Hero Group said it is acquiring Honda’s entire 26% stake in the joint venture at Rs739.97 a share, at a near 50% discount to the day’s closing stock price and translating into a deal size of around $851 million (Rs3,829.5 crore).
The steep discount had experts raising questions over whether Honda would demand a higher royalty or model fee to make up for the loss.
The stake has a market value of nearly $2 billion.
The two companies have signed a fresh licensing agreement that runs through 2014 and covers current models and new launches. The agreement also allows Hero to launch models that will not carry the Honda brand.
Hero group has briefed advertising firms JWT, DraftUlka and Percept H to work on its new brand strategy. “We have been asked by the company to come back with thoughts on the new strategy,” said a top executive with one of these firms, asking not to be identified. Executives at the other two firms confirmed the development.
Mint reported on 17 December that the Hero group had started working on a new corporate identity and brand logo.
“We have been in talks with many firms for such association,” Munjal said.
The advertising executive quoted above said Hero group has been trying to promote its sub-brands for some time now and the Karizma campaign could be its first attempt on a large platform.
An executive with a consultancy firm said Hero group may not follow the same strategy abroad.
“Export plans are very critical,” the consultant said, requesting anonymity. “Since the company will be venturing out aggressively, they will have to figure out the right way.”
He added that while bikes such as Splendor and Passion have become “iconic” in India, there was a risk quotient involved in markets “where people don’t know the brand and they may not be able to evoke the same excitement”.
Hero group’s strategy to promote its sub-brands is similar to that of its main rival Bajaj Auto Ltd, which intensely focuses on its sub-brands in the country but sells its motorcycles abroad under Bajaj brand.
“An effective strategy is finally about strong brand positioning at the front-end keeping the customer connection in mind, while keeping things simpler at the back-end comprising design, manufacturing and development,” said an executive at Bajaj Auto. “It is a long-term process. We really want to see what Hero does about it.”
Under wraps: Promos for the new Karizma ZMR motorcycle from the Hero Group’s stable at the Feroz Shah Kotla Stadium in New Delhi, one of the venues for the ongoing cricket World Cup.
Hero and Honda are parting ways, and the Karizma promos are the first of the Indian group’s new branding strategy as it prepares to go to the market alone after a 26-year partnership.
“This is a part of our long-term strategy,” said Sunil Kant Munjal, chairman of Hero Corporate Services Ltd and a member on the Hero Honda board, when asked about the Karizma ZMR advertisements at the sidelines of a conference on 28 February. “We are not rushing into it.”
Hero Corporate Services is a part of the Hero group.
There is no mention of the company’s name in the Karizma advertisements on billboards or on cricket grounds where the World Cup matches are being played.
The Hero group has previously said it would evolve its own brand after the split and enter overseas markets such as Latin America, Africa and West Asia with a new logo.
“In the new export markets, the Hero brand will be taken forward. We are free to export any model under our brand name,” Anil Dua, senior vice-president (marketing and sales), had said during a conference call with analysts and investors days after the break-up in December. Dua did not answer calls on Wednesday.
Hero Honda, with a line-up of high-selling motorcycles including the Splendour and the Passion, is the top motorcycle maker in the country by sales.
“Gone are the days when your products used to sell just because you had a strong brand. Once Honda goes away from Hero, they will have to keep in mind that it is because of the product that a strong brand is established,” said Abdul Majeed, auto partner, at consulting firm PricewaterhouseCoopers. “In my view, the brand is not Hero Honda but Splendor and Passion; and these will not suffer in the immediate term.”
On Tuesday, the $4-billion Hero Group said it is acquiring Honda’s entire 26% stake in the joint venture at Rs739.97 a share, at a near 50% discount to the day’s closing stock price and translating into a deal size of around $851 million (Rs3,829.5 crore).
The steep discount had experts raising questions over whether Honda would demand a higher royalty or model fee to make up for the loss.
The stake has a market value of nearly $2 billion.
The two companies have signed a fresh licensing agreement that runs through 2014 and covers current models and new launches. The agreement also allows Hero to launch models that will not carry the Honda brand.
Hero group has briefed advertising firms JWT, DraftUlka and Percept H to work on its new brand strategy. “We have been asked by the company to come back with thoughts on the new strategy,” said a top executive with one of these firms, asking not to be identified. Executives at the other two firms confirmed the development.
Mint reported on 17 December that the Hero group had started working on a new corporate identity and brand logo.
“We have been in talks with many firms for such association,” Munjal said.
The advertising executive quoted above said Hero group has been trying to promote its sub-brands for some time now and the Karizma campaign could be its first attempt on a large platform.
An executive with a consultancy firm said Hero group may not follow the same strategy abroad.
“Export plans are very critical,” the consultant said, requesting anonymity. “Since the company will be venturing out aggressively, they will have to figure out the right way.”
He added that while bikes such as Splendor and Passion have become “iconic” in India, there was a risk quotient involved in markets “where people don’t know the brand and they may not be able to evoke the same excitement”.
Hero group’s strategy to promote its sub-brands is similar to that of its main rival Bajaj Auto Ltd, which intensely focuses on its sub-brands in the country but sells its motorcycles abroad under Bajaj brand.
“An effective strategy is finally about strong brand positioning at the front-end keeping the customer connection in mind, while keeping things simpler at the back-end comprising design, manufacturing and development,” said an executive at Bajaj Auto. “It is a long-term process. We really want to see what Hero does about it.”
Hero to buy Honda stake for Rs 740 per share
The Hero Group, owned by New Delhi-based Munjal family, will pay 3,833 crore to acquire a 26% stake from its 27-year-old Japanese joint venture partner Honda Motor Co in the two-wheeler major Hero Honda.
The transaction was completed for a valuation of 739.97 per share - at less than half of the Tuesday's closing price of 1,518.15 on the Bombay Stock Exchange (BSE).
The Hero Group said in a release that it was acquiring the entire 26% stake of Honda Motor Co in their joint-venture Hero Honda Motors Ltd at 739.97 per share.
The Hero group has also signed definitive agreements with two private equity firms, Bain Capital and Government of Singapore Investment Corporation (GIC) to raise around 3,700 crore through issue of fresh share of Hero Investment Private Ltd (HIPL). HIPL is promoter's investment company that will acquire Honda Motor's 26% stake in Hero Honda. It also owns 17.33% stake in Hero Honda.
The transaction was completed for a valuation of 739.97 per share - at less than half of the Tuesday's closing price of 1,518.15 on the Bombay Stock Exchange (BSE).
The Hero Group said in a release that it was acquiring the entire 26% stake of Honda Motor Co in their joint-venture Hero Honda Motors Ltd at 739.97 per share.
The Hero group has also signed definitive agreements with two private equity firms, Bain Capital and Government of Singapore Investment Corporation (GIC) to raise around 3,700 crore through issue of fresh share of Hero Investment Private Ltd (HIPL). HIPL is promoter's investment company that will acquire Honda Motor's 26% stake in Hero Honda. It also owns 17.33% stake in Hero Honda.
Yamaha mulls electric 2-wheeler for India; 2 new bikes in 2011
Japanese auto giant Yamaha today said it might consider launching an electric bike in the fast growing Indian two-wheeler market to offer an alternative mode transportation.
The company's wholly-owned subsidiary, India Yamaha Motor, is also developing an India-specific scooter that will hit the roads in the "near future". Besides, it will launch two new bikes in the country in this year.
"For rising fuel prices, electric bike is a good option. Currently we are selling electric bikes in Japan and Europe. There is a possibility for the Indian market for introducing these products," India Yamaha Motor Director (Sales and Marketing) Jun Nakata told PTI.
The company's wholly-owned subsidiary, India Yamaha Motor, is also developing an India-specific scooter that will hit the roads in the "near future". Besides, it will launch two new bikes in the country in this year.
"For rising fuel prices, electric bike is a good option. Currently we are selling electric bikes in Japan and Europe. There is a possibility for the Indian market for introducing these products," India Yamaha Motor Director (Sales and Marketing) Jun Nakata told PTI.
Ranbir Kapoor to become new face of Hero Honda
Ranbir Kapoor as the brand ambassador for Hero Honda Motors, according to people familiar with the development. The world’s largest two-wheeler maker would thus be replacing actor Hrithik Roshan who has been riding its popular Karizma motorcycle as brand ambassador since 2000.
The move assumes significance at a time when the two-wheeler maker is in the midst of corporate transformation that includes a change in brand name, positioning and brand building over the next few years.
The face behind the brand is being changed as the Munjals of Hero group are striving to hold on to their dominant position following the exit of their 26-year-old Japanese joint venture partner Honda Motor. “Ranbir fits the strategy as the company is targeting the youth with its products,” Surjit Arora, auto analyst at Prabhudas Liladher, said.“It will also help Hero group to strengthen its brand image, especially with the exit of Honda,” Arora added.
“Ranbir Kapoor is a good choice for the brand as he is young and popular — qualities that are very important for a bike brand. The association will help the brand connect with the masses,” said Harish Bijoor, CEO of Harish Bijoor Consults.
Hero Honda’s rural connection is also huge as it derives a big chunk of sales (42 per cent) from these markets. And nothing works better than a fresh face that also happens to be the new darling of the masses.
Hero Honda’s latest strategy seems skewed towards promoting independent brands like Splendor, Passion, Pleasure and Karizma ZMR. This is a marked change from its previous advertising focus on the entire portfolio and the company’s name being projected as the mother brand. The two-wheeler maker has already started building bikes without the Honda brand name, according to vendors.
Anirban Das Blah, MD and CEO at Kwan Entertainment and Marketing Solutions that manages Ranbir’s endorsement deals, did not deny the development but did not give out details of the Hero Honda deal. Ranbir already endorses brands like Nissan Motor’s Micra, PepsiCo and Panasonic. “Change in brand ambassador might just be the tip of the iceberg for some major branding strategy change at Hero Honda,” said Santosh Desai, CEO of Future Brands.
The move assumes significance at a time when the two-wheeler maker is in the midst of corporate transformation that includes a change in brand name, positioning and brand building over the next few years.
The face behind the brand is being changed as the Munjals of Hero group are striving to hold on to their dominant position following the exit of their 26-year-old Japanese joint venture partner Honda Motor. “Ranbir fits the strategy as the company is targeting the youth with its products,” Surjit Arora, auto analyst at Prabhudas Liladher, said.“It will also help Hero group to strengthen its brand image, especially with the exit of Honda,” Arora added.
“Ranbir Kapoor is a good choice for the brand as he is young and popular — qualities that are very important for a bike brand. The association will help the brand connect with the masses,” said Harish Bijoor, CEO of Harish Bijoor Consults.
Hero Honda’s rural connection is also huge as it derives a big chunk of sales (42 per cent) from these markets. And nothing works better than a fresh face that also happens to be the new darling of the masses.
Hero Honda’s latest strategy seems skewed towards promoting independent brands like Splendor, Passion, Pleasure and Karizma ZMR. This is a marked change from its previous advertising focus on the entire portfolio and the company’s name being projected as the mother brand. The two-wheeler maker has already started building bikes without the Honda brand name, according to vendors.
Anirban Das Blah, MD and CEO at Kwan Entertainment and Marketing Solutions that manages Ranbir’s endorsement deals, did not deny the development but did not give out details of the Hero Honda deal. Ranbir already endorses brands like Nissan Motor’s Micra, PepsiCo and Panasonic. “Change in brand ambassador might just be the tip of the iceberg for some major branding strategy change at Hero Honda,” said Santosh Desai, CEO of Future Brands.
Bajaj Discover 100 gets 2011 colours
Commuters in India today have progressed from being simple looking mile munchers to stylish motorcyles with genuine performance capabilities, and are no longer looked upon as a compromise for consumers with a tight budget for their motorcycles. The Bajaj Discover 100, which was introduced by Bajaj in 2009 was an instant hit, and paved the way for its elder sibling the Discover 150 to make its mark in the 150cc Commuter Class segment in the country.
The growing demand and continued success of both the Discover 100 and the 150 has in effect helped Bajaj achieve the milestone of selling more than 40 lakh Discovers, and to celebrate this stupendous success Bajaj Auto has introduced the 2011 edition of the largest selling variant of its flagship model, i.e. the Discover 100.
The 2011 edition of Discover 100 will sport premium and innovative multicolor graphics, which will be available in two options: Gold Green and Red Magenta. The key feature of this multi color decal will be its ability to change in the two colors in each shade when one looks it from different angles in the sunlight. Good novelty for Bajaj Auto’s commuter-buying target base around the country we think!
The growing demand and continued success of both the Discover 100 and the 150 has in effect helped Bajaj achieve the milestone of selling more than 40 lakh Discovers, and to celebrate this stupendous success Bajaj Auto has introduced the 2011 edition of the largest selling variant of its flagship model, i.e. the Discover 100.
The 2011 edition of Discover 100 will sport premium and innovative multicolor graphics, which will be available in two options: Gold Green and Red Magenta. The key feature of this multi color decal will be its ability to change in the two colors in each shade when one looks it from different angles in the sunlight. Good novelty for Bajaj Auto’s commuter-buying target base around the country we think!
M&M Ropes in its Italian Design Co to Put its Stallio Bike Back on Road
Group co Engines Engineering to modify co’s stalled first 100 cc bike.
Mahindra Two Wheelers, part of the Mahindra Group, has roped in group company and Italian design services firm Engines Engineering to rectify the defects of its 100 cc bike Stallio, which has been struggling to boost sales ever since its launch in October 2010.
The bike, which sold only 46 units in February after the company curtailed production to repair faulty clutch and gear parts, will be modified and relaunched shortly. Engines Engineering is working closely with in-house R&D experts to modify the bike which marked the Mahindra group’s entry into the motorcycle market, dominated by rivals Hero Honda and the Bajaj Group.
“While it was a small aberration, we had to be mindful of the customer. We took a holistic view of the supply chain (vendors), technology managers, front end and came up with a remedial solution. We had to minimise the variability by modifying certain components,” said Anoop Mathur, president, Mahindra Two Wheelers. “Rather than flood the system, we decided to cut down on production of the bike. Engines Engineering and our internal R&D team helped rectify the issue.”
The company plans to re-engage with the customer to boost market share. “We have done trial runs on the Stallio after rectification and are also working on different modes of communication,” Mr Mathur said. Since its launch, M&M has sold 5,181 Stallios with sales in January falling to 509 bikes. Scooters account for more than 90% of the company’s twowheelers business.
With the overhaul exercise for Stallio underway, the company has postponed the launch of its 300 cc premium bike Mojo to the next festival season. Mojo was planned to be launched in the first quarter of this financial year. “We are making sure that all aspects of the bike are appropriately tested and will launch the bike towards the festive season,” said Mr Mathur. The customer base and requirement is completely different for this premium bike.
Mahindra Two Wheelers, part of the Mahindra Group, has roped in group company and Italian design services firm Engines Engineering to rectify the defects of its 100 cc bike Stallio, which has been struggling to boost sales ever since its launch in October 2010.
The bike, which sold only 46 units in February after the company curtailed production to repair faulty clutch and gear parts, will be modified and relaunched shortly. Engines Engineering is working closely with in-house R&D experts to modify the bike which marked the Mahindra group’s entry into the motorcycle market, dominated by rivals Hero Honda and the Bajaj Group.
“While it was a small aberration, we had to be mindful of the customer. We took a holistic view of the supply chain (vendors), technology managers, front end and came up with a remedial solution. We had to minimise the variability by modifying certain components,” said Anoop Mathur, president, Mahindra Two Wheelers. “Rather than flood the system, we decided to cut down on production of the bike. Engines Engineering and our internal R&D team helped rectify the issue.”
The company plans to re-engage with the customer to boost market share. “We have done trial runs on the Stallio after rectification and are also working on different modes of communication,” Mr Mathur said. Since its launch, M&M has sold 5,181 Stallios with sales in January falling to 509 bikes. Scooters account for more than 90% of the company’s twowheelers business.
With the overhaul exercise for Stallio underway, the company has postponed the launch of its 300 cc premium bike Mojo to the next festival season. Mojo was planned to be launched in the first quarter of this financial year. “We are making sure that all aspects of the bike are appropriately tested and will launch the bike towards the festive season,” said Mr Mathur. The customer base and requirement is completely different for this premium bike.
No Immediate Return to scooters, says Rajiv Bajaj
NEW DELHI: The country's second largest two-wheeler maker Bajaj Auto today reiterated it will not make a comeback to the Indian scooter segment in immediate future as it aims a bigger share in the global motorcycle market.
"We are a motorcycle company... We will remain focused on motorcycles," Bajaj Auto Managing Director Rajiv Bajaj said at an All India Management Association conference here.
He was replying to a query on reports quoting the company Chairman Rahul Bajaj that Bajaj Auto may consider re-entering into the scooter market.
"The world market for motorcycles is of 35 million units and Bajaj will end this fiscal by selling only 3.5 million units. We have a market share of 10 per cent, and so we have headroom for 90 per cent growth," Bajaj said.
In the April-January period this fiscal, the company sold 19,89,377 bikes in the domestic market as against 14,11,259 units in the same period last year, up 40.96 per cent.
Bajaj Auto's export during the period has also grown by 35.78 per cent to 8,36,617 units as against 6,16,135 units in the same period a year ago.
When asked why the company stopped production of its scooters, Bajaj said: "We did not phase out, but people stopped buying scooters."
In December 2009, the company had announced that it would stop making scooters by end of 2009-10 fiscal, thus bringing down the curtains on 'Hamara Bajaj', which revolutionised the two-wheeler market in the country.
However, since the auto major stopped making scooters, the segment has witnessed a significant growth, led by gearless scooters from Honda Motorcycle & Scooter India, which is the market leader in the segment now.
In the April-January period this fiscal, the Indian scooter market has witnessed a growth of 46.57 per cent at 16,97,204 units as against 11,57,902 units in the comparable period last fiscal, as per Society of Indian Automobile Manufacturers Association (SIAM) data.
The Pune-based two-wheeler maker on the other hand is focusing on motorcycles, offering a range of models such as Discover, Pulsar and has even increased stake in Austrian bike maker KTM Power Sports AG to nearly 38.09 per cent as it looks to expand presence globally.
Bajaj Auto and KTM have been jointly developing products and the first of the co-developed products, KTM Duke 125, will hit European markets this year. The KTM models are supposed to be launched in India during the second half this year.
"We are a motorcycle company... We will remain focused on motorcycles," Bajaj Auto Managing Director Rajiv Bajaj said at an All India Management Association conference here.
He was replying to a query on reports quoting the company Chairman Rahul Bajaj that Bajaj Auto may consider re-entering into the scooter market.
"The world market for motorcycles is of 35 million units and Bajaj will end this fiscal by selling only 3.5 million units. We have a market share of 10 per cent, and so we have headroom for 90 per cent growth," Bajaj said.
In the April-January period this fiscal, the company sold 19,89,377 bikes in the domestic market as against 14,11,259 units in the same period last year, up 40.96 per cent.
Bajaj Auto's export during the period has also grown by 35.78 per cent to 8,36,617 units as against 6,16,135 units in the same period a year ago.
When asked why the company stopped production of its scooters, Bajaj said: "We did not phase out, but people stopped buying scooters."
In December 2009, the company had announced that it would stop making scooters by end of 2009-10 fiscal, thus bringing down the curtains on 'Hamara Bajaj', which revolutionised the two-wheeler market in the country.
However, since the auto major stopped making scooters, the segment has witnessed a significant growth, led by gearless scooters from Honda Motorcycle & Scooter India, which is the market leader in the segment now.
In the April-January period this fiscal, the Indian scooter market has witnessed a growth of 46.57 per cent at 16,97,204 units as against 11,57,902 units in the comparable period last fiscal, as per Society of Indian Automobile Manufacturers Association (SIAM) data.
The Pune-based two-wheeler maker on the other hand is focusing on motorcycles, offering a range of models such as Discover, Pulsar and has even increased stake in Austrian bike maker KTM Power Sports AG to nearly 38.09 per cent as it looks to expand presence globally.
Bajaj Auto and KTM have been jointly developing products and the first of the co-developed products, KTM Duke 125, will hit European markets this year. The KTM models are supposed to be launched in India during the second half this year.
Honda CBR zooms before launch
Honda CBR zooms before launch.Will be on the street from April, 2400 bikes booked is already booked.
Two wheeler company Honda Motorcycle and Scooter India is going to launch CBR 250R in the next month, but the booking of this bike is on flow. Already 2400 bike has been booked. While speaking to Business Standard Journalist, one of their executive said that from 1st Jan they started the booking for this bike and till date already 2400 bikes are been booked. 1800 bikes were booked in a month and company is expecting the number will reach to 3,000 by April.
Two wheeler company Honda Motorcycle and Scooter India is going to launch CBR 250R in the next month, but the booking of this bike is on flow. Already 2400 bike has been booked. While speaking to Business Standard Journalist, one of their executive said that from 1st Jan they started the booking for this bike and till date already 2400 bikes are been booked. 1800 bikes were booked in a month and company is expecting the number will reach to 3,000 by April.
M&M to rectify Stallio gearbox
Automaker Mahindra & Mahindra (M&M) has offered to rectify a problem in the gearbox of some of its 110cc Stallio motorcycles. The Stallio marked the entry of the maker of utility vehicles and tractors into the highly competitive motorcycle market.
Responding to a query on problems with the Stallio gearbox, M&M in a statement said: “We... are aware that certain parts of the bike require some fine tuning and adjustment in a small proportion of the product. We are proactively addressing the same.”
However, the company did not furnish any details on how many motorcycles have a gearbox problem and need to be rectified.
Since its launch in September 2010, M&M has sold over 5,135 Stallios until January this year. However, average sales of the Stallio during the last two months have been less than 400 units a month. In comparison, the country’s leading two-wheeler makers like Hero Honda, Bajaj Auto, TVS Motor and Honda sell an average of over 100,000 bikes a month in the 75-125cc segment.
StallioWhile recalls, repairs and retrofits are fairly common in the passenger car industry — recent domestic instances include Honda’s recall of some versions of the City and Tata Motors’ retrofit of the Nano — there have been very few cases for motorcycles.
M&M has also encountered delivery problems with the Stallio. Its two-wheeler dealers have been asking potential buyers to wait for at least a month for delivery. The bike costs Rs 52,300 (on the road in Mumbai). The company maintains that demand for the bike has been very strong since launch, and that it has been unable to meet it because of inadequate supply of parts by vendors.
“When we launched the Stallio, the response we received was very positive and we had significant demand. However, today we are faced with certain supply-chain related constraints of some critical components. This is a short-term phenomenon and will be sorted out latest by June 2011,” M&M stated.
The company is trying to resolve supply-side issues by ramping up production at its facility in Pithampur near Indore. Brakes have also been applied to plans to add new dealers, particularly in areas where the brand has a strong pull, because of low volumes.
Most of M&M’s stable of two-wheelers includes automatic scooters such as the Rodeo, Duro and Flyte. Motorcycles are more popular in semi-urban and rural areas, as is evident from the success of models belonging to Hero Honda and Bajaj in those areas.
Responding to a query on problems with the Stallio gearbox, M&M in a statement said: “We... are aware that certain parts of the bike require some fine tuning and adjustment in a small proportion of the product. We are proactively addressing the same.”
However, the company did not furnish any details on how many motorcycles have a gearbox problem and need to be rectified.
Since its launch in September 2010, M&M has sold over 5,135 Stallios until January this year. However, average sales of the Stallio during the last two months have been less than 400 units a month. In comparison, the country’s leading two-wheeler makers like Hero Honda, Bajaj Auto, TVS Motor and Honda sell an average of over 100,000 bikes a month in the 75-125cc segment.
StallioWhile recalls, repairs and retrofits are fairly common in the passenger car industry — recent domestic instances include Honda’s recall of some versions of the City and Tata Motors’ retrofit of the Nano — there have been very few cases for motorcycles.
M&M has also encountered delivery problems with the Stallio. Its two-wheeler dealers have been asking potential buyers to wait for at least a month for delivery. The bike costs Rs 52,300 (on the road in Mumbai). The company maintains that demand for the bike has been very strong since launch, and that it has been unable to meet it because of inadequate supply of parts by vendors.
“When we launched the Stallio, the response we received was very positive and we had significant demand. However, today we are faced with certain supply-chain related constraints of some critical components. This is a short-term phenomenon and will be sorted out latest by June 2011,” M&M stated.
The company is trying to resolve supply-side issues by ramping up production at its facility in Pithampur near Indore. Brakes have also been applied to plans to add new dealers, particularly in areas where the brand has a strong pull, because of low volumes.
Most of M&M’s stable of two-wheelers includes automatic scooters such as the Rodeo, Duro and Flyte. Motorcycles are more popular in semi-urban and rural areas, as is evident from the success of models belonging to Hero Honda and Bajaj in those areas.
More power to the electric vehicle maker
To reduce dependence on fossil fuels and promote alternative vehicle technologies, the Government announced on Monday a variety of incentives for electric vehicles (EVs) and hybrids in Budget 2011-12.
It also announced the formation of a new inter-ministerial mission for EVs and hybrids, which would be a single-point resource for all the industry's needs on infrastructure, R&D and new incentives.
“World over, substantial investments are being made in the field of hybrid and electric mobility. To provide green and clean transportation for the masses, National Mission for Hybrid and Electric Vehicles will be launched in collaboration with all stakeholders,” said Finance Minister Mr Pranab Mukherjee in his Budget speech.
The new agency aims to support the development of a cost-effective EV technology for a mass platform and start operations by April-May. It will be administered by the Ministry of Heavy Industry, but include Ministries like Urban Development, New and Renewable Energy, Power, besides the industry as stakeholders.
“For funds, we will pool the allocations given to all the other Ministries, like the JNNURM and the Climate Change Fund of the Ministry of Environment. We will be sending the Cabinet note very shortly, but since the announcement has been made, we expect to start constituting the council by April,” Mr B.S. Meena, Secretary, Heavy Industries told Business Line.
The Government has also proposed extending the basic customs duty exemption and concessional rate of Central Excise duty of 4 per cent for batteries imported by manufacturers for the replacement market.
This was provided for some specified parts of electrical vehicles in the previous Budget. Concessional excise duty of 10 per cent has also been proposed for vehicles with fuel cell or hydrogen cell technology. Hybrid vehicles already enjoy a concessional excise duty rate of 10 per cent.
Dr Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra said the company is working on developing full hybrids on a commercial scale and the new policy would provide a significant incentive to promote the development, manufacture and sale of such vehicles in India. Mahindra-Reva is currently the only company to retail electric cars in India.
Though Mr R.C. Bhargava, Chairman, Maruti Suzuki said EVs are yet to be commercially viable, GM India's Mr Karl Slym said the announcements were on the right path and would accelerate the industry's plans on EVs and hybrids.
With many critical parts for such vehicles currently being imported, some specified parts have also been given a full exemption from basic customs duty and special CVD. However, a concessional rate of excise duty of 5 per cent has been prescribed to incentivise their domestic production.
Further, the excise duty on hybrid kits that convert traditional vehicles into more fuel-efficient machines, has been reduced to 5 per cent from 10 per cent.
Mr Kumar Kandaswami, Leader Manufacturing, Deloitte India said, “The mission for electric and hybrid vehicles may bring about acceleration in the mainstreaming of these technologies.”
It also announced the formation of a new inter-ministerial mission for EVs and hybrids, which would be a single-point resource for all the industry's needs on infrastructure, R&D and new incentives.
“World over, substantial investments are being made in the field of hybrid and electric mobility. To provide green and clean transportation for the masses, National Mission for Hybrid and Electric Vehicles will be launched in collaboration with all stakeholders,” said Finance Minister Mr Pranab Mukherjee in his Budget speech.
The new agency aims to support the development of a cost-effective EV technology for a mass platform and start operations by April-May. It will be administered by the Ministry of Heavy Industry, but include Ministries like Urban Development, New and Renewable Energy, Power, besides the industry as stakeholders.
“For funds, we will pool the allocations given to all the other Ministries, like the JNNURM and the Climate Change Fund of the Ministry of Environment. We will be sending the Cabinet note very shortly, but since the announcement has been made, we expect to start constituting the council by April,” Mr B.S. Meena, Secretary, Heavy Industries told Business Line.
The Government has also proposed extending the basic customs duty exemption and concessional rate of Central Excise duty of 4 per cent for batteries imported by manufacturers for the replacement market.
This was provided for some specified parts of electrical vehicles in the previous Budget. Concessional excise duty of 10 per cent has also been proposed for vehicles with fuel cell or hydrogen cell technology. Hybrid vehicles already enjoy a concessional excise duty rate of 10 per cent.
Dr Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra said the company is working on developing full hybrids on a commercial scale and the new policy would provide a significant incentive to promote the development, manufacture and sale of such vehicles in India. Mahindra-Reva is currently the only company to retail electric cars in India.
Though Mr R.C. Bhargava, Chairman, Maruti Suzuki said EVs are yet to be commercially viable, GM India's Mr Karl Slym said the announcements were on the right path and would accelerate the industry's plans on EVs and hybrids.
With many critical parts for such vehicles currently being imported, some specified parts have also been given a full exemption from basic customs duty and special CVD. However, a concessional rate of excise duty of 5 per cent has been prescribed to incentivise their domestic production.
Further, the excise duty on hybrid kits that convert traditional vehicles into more fuel-efficient machines, has been reduced to 5 per cent from 10 per cent.
Mr Kumar Kandaswami, Leader Manufacturing, Deloitte India said, “The mission for electric and hybrid vehicles may bring about acceleration in the mainstreaming of these technologies.”
Swinging between smiles & grimaces
As Finance minister Pranab Mukherjee laid down the Union budget, India Inc’s mood swung from good to bad to ugly.
Corporate honchos at the FICCI started off on a positive note by calling the budget, “balanced and pro growth”. “Agriculture and manufacturing are two big things that the finance minister has spoken about. He says the FDI policy will be liberalised which gives hope to not just retail but many other industries,” said Rajan Bharti Mittal, VC and MD, Bharti Enterprises.
Naina Lal Kidwai, GM and country head of the HSBC Group was upbeat about the mention of ‘green’ in the budget. “It is a balanced and pro growth budget. The aspects which interested me the most are green technology, electric cars, LEDs, and the mention of cleaning Indian rivers. It shows how sustainability and environment are becoming the language of budget,” she said.
However, even before the post budget discussion could end, discontent had started gaining voice. Healthcare representatives expressed their unhappiness at the introduction of service tax in healthcare. The budget proposes a tax on all services provided by hospitals with 25 or more beds that have facility of centralised air-conditioning. Although the tax is on high-end treatment, there has been an abatement of 50 per cent so that the actual burden is kept at 5 per cent of value of service.
“The 5 per cent service tax is the first step to get healthcare segment under the service net. It will grow with time. And whatever increase will happen here will be passed on to the consumer directly,” said Sangita Reddy, executive director - operations, Apollo Group of Hospitals. Shivinder Mohan Singh, managing director of Fortis Healthcare, concurred, “Healthcare coming under the tax ambit will add to the inflation in the country.” Dr Habil Khorakiwala, chairman of Wockhardt added, “To me the budget could have been far bolder than what it is given the challenges before the economy.”
At the CII too, India Inc. had mixed reactions. While automobile honchos including the likes of RC Bhargava, chairman of Maruti Suzuki India and Venu Srinivasan, chairman of TVS Motor seemed relieved about no hike in excise duty on cars and bikes, others such as RS Sharma, former chairman of oil major ONGC, rued no aid to loss making oil companies. “It’s not a positive budget for the oil sector. Issues haven’t been addressed. The crude prices are at an all time high. We were expecting relief, but the budget is mum,” said Sharma. Pawan Goenka, president of automotive at M&M and head of Society of Indian Automobile Manufacturers (Siam), was ecstatic at no levy on diesel vehicles’ purchase. “No diesel vehicle tax is a sigh of relief,” Goenka said. M&M only sells diesel vehicles.
Dissatisfation ruled the post budget discussion at the ASSOCHAM too. “Tourism sector was expecting benefits similar to exporters. Like exports, tourism too needs service tax exemption,” said Subhash Goyal, co-chairman, Tourism and Hospitality Committee, ASSOCHAM and chairman, STIC Travels.
Corporate honchos at the FICCI started off on a positive note by calling the budget, “balanced and pro growth”. “Agriculture and manufacturing are two big things that the finance minister has spoken about. He says the FDI policy will be liberalised which gives hope to not just retail but many other industries,” said Rajan Bharti Mittal, VC and MD, Bharti Enterprises.
Naina Lal Kidwai, GM and country head of the HSBC Group was upbeat about the mention of ‘green’ in the budget. “It is a balanced and pro growth budget. The aspects which interested me the most are green technology, electric cars, LEDs, and the mention of cleaning Indian rivers. It shows how sustainability and environment are becoming the language of budget,” she said.
However, even before the post budget discussion could end, discontent had started gaining voice. Healthcare representatives expressed their unhappiness at the introduction of service tax in healthcare. The budget proposes a tax on all services provided by hospitals with 25 or more beds that have facility of centralised air-conditioning. Although the tax is on high-end treatment, there has been an abatement of 50 per cent so that the actual burden is kept at 5 per cent of value of service.
“The 5 per cent service tax is the first step to get healthcare segment under the service net. It will grow with time. And whatever increase will happen here will be passed on to the consumer directly,” said Sangita Reddy, executive director - operations, Apollo Group of Hospitals. Shivinder Mohan Singh, managing director of Fortis Healthcare, concurred, “Healthcare coming under the tax ambit will add to the inflation in the country.” Dr Habil Khorakiwala, chairman of Wockhardt added, “To me the budget could have been far bolder than what it is given the challenges before the economy.”
At the CII too, India Inc. had mixed reactions. While automobile honchos including the likes of RC Bhargava, chairman of Maruti Suzuki India and Venu Srinivasan, chairman of TVS Motor seemed relieved about no hike in excise duty on cars and bikes, others such as RS Sharma, former chairman of oil major ONGC, rued no aid to loss making oil companies. “It’s not a positive budget for the oil sector. Issues haven’t been addressed. The crude prices are at an all time high. We were expecting relief, but the budget is mum,” said Sharma. Pawan Goenka, president of automotive at M&M and head of Society of Indian Automobile Manufacturers (Siam), was ecstatic at no levy on diesel vehicles’ purchase. “No diesel vehicle tax is a sigh of relief,” Goenka said. M&M only sells diesel vehicles.
Dissatisfation ruled the post budget discussion at the ASSOCHAM too. “Tourism sector was expecting benefits similar to exporters. Like exports, tourism too needs service tax exemption,” said Subhash Goyal, co-chairman, Tourism and Hospitality Committee, ASSOCHAM and chairman, STIC Travels.
Venu Srinivasan CMD, TVS Motors: Budget Reaction
Finance Minister Pranab Mukherjee announced the Union Budget 2011-12 in Parliament on February 28. The budget saw the excise duty remaining unchanged at 10-22%, contrary to a widely expected 2% hike. Special incentives have been announced for companies manufacturing hybrid vehicles in India.
In an interview with CNBC-TV18, Venu Srinivasan, the chairman and managing director of TVS Motors says he did not view any negativity in the budget, in fact, he saw it bordering on the positive. “The most important direction is that fiscal deficit will come down to 4.6%,” he adds.
Here is a verbatim transcript of the exclusive interview with Venu Srinivasan on CNBC-TV18.
Q: We weren’t expecting much. From an industry’s point of view, there is nothing negative. He (FM) has let excise stay where it is, he has widened the service tax net, which was expected, the service tax rate remains the same, he has given you a date on DTC, he has given you some sort of a map as far as GST is concerned. So, there is no real negative in that sense for corporate India, right?
A: There is no negativity in this budget. In fact some surprises that were expected in increasing the excise duty has not materialised. So, to that extent, it is even positive. The most important direction is that fiscal deficit will come down to 4.6%.
Q: Are you skeptical about how we are going to be able to achieve this 4.6% figure?
A: Knowing him, no. He has always delivered on what he says. If you ask him about the big ideas, which people constantly criticise him for not making, he says that depends on different arms of the government. He is not a person who pushes the big ideas of the government as a whole, but only sticks to his role as FM.
In an interview with CNBC-TV18, Venu Srinivasan, the chairman and managing director of TVS Motors says he did not view any negativity in the budget, in fact, he saw it bordering on the positive. “The most important direction is that fiscal deficit will come down to 4.6%,” he adds.
Here is a verbatim transcript of the exclusive interview with Venu Srinivasan on CNBC-TV18.
Q: We weren’t expecting much. From an industry’s point of view, there is nothing negative. He (FM) has let excise stay where it is, he has widened the service tax net, which was expected, the service tax rate remains the same, he has given you a date on DTC, he has given you some sort of a map as far as GST is concerned. So, there is no real negative in that sense for corporate India, right?
A: There is no negativity in this budget. In fact some surprises that were expected in increasing the excise duty has not materialised. So, to that extent, it is even positive. The most important direction is that fiscal deficit will come down to 4.6%.
Q: Are you skeptical about how we are going to be able to achieve this 4.6% figure?
A: Knowing him, no. He has always delivered on what he says. If you ask him about the big ideas, which people constantly criticise him for not making, he says that depends on different arms of the government. He is not a person who pushes the big ideas of the government as a whole, but only sticks to his role as FM.
Superbikes hit steady pace on Indian roads
Superbikes, defined as bikes with engine capacities of 1,000 cc and above, are finding plenty of takers. The market, which grew more than 60 per cent selling over 2,000 units in 2010, is expected to grow by more than 50 per cent this year.
“People’s incomes are rising and they’re realising that superbikes can be used on Indian roads too,” said NK Rattan, operating head (sales & marketing), Honda Motorcycle & Scooter India. Honda sells superbikes like Fireblade, CB1000R and VFR1200S priced at Rs 9.5-12.5 lakh. “Since 2008, more and more people are buying these bikes,” he added.
The clientele, said Rattan, includes doctors, lawyers, and well-settled professionals in their forties, all of whom are indulging in their passion for superbikes. These high net worth professionals roughly form as much as half the superbike buyers. The rest, aged between 21 and 35, are split between those who buy superbikes as a status symbol and some who look for performance. “A person may have a Mercedes, but he likes to go for a ride on a superbike with his girlfriend,” said Roy Kurian, national business head, India Yamaha Motor. The company sells FZ1, R1, MT-01 and V-Max superbikes priced at Rs 8.5-20 lakh. “This segment doesn’t require promotion. These customers know more about the bikes than the makers,” added Kurian.
Improving road infrastructure in and around big cities is driving bike makers to introduce new superbike models. “Global auto majors are recognising that India is evolving as the next big destination for the super-premium segment,” said Kapil Arora, partner (automotive), Ernst & Young.
Ducati and Harley Davidson set shop in India to sell their imported superbikes costing between Rs 7 lakh and Rs 42 lakh, while BMW Motorcycles will hit the Indian roads later this year. “Demand for superbikes will continue to be driven from big cities which have good roads” said Abdul Majeed, auto practice leader, PwC.
Superbike demand took off after Suzuki Motorcycle India launched the Hayabusa in 2007. The firm also sells Gixxer and Bandit 1250S priced at Rs 8.5 lakh and Rs 12.5 lakh.
Superbike makers also seem to be attacking the premium bike segment between 150 cc and 250 cc at price points of Rs 1 lakh to Rs 2.5 lakh to provide a feel of the bigger superbikes in similar looking but underpowered models. Yamaha, which launched an India-specific R15 model (Rs 103,000) in 2008 based on its global R1 bestseller, has seen huge success with the bike. “Initially, the demand for R15 was for 2,000 units, which has gone up to 4,000 units a month,” said Kurian.
“People’s incomes are rising and they’re realising that superbikes can be used on Indian roads too,” said NK Rattan, operating head (sales & marketing), Honda Motorcycle & Scooter India. Honda sells superbikes like Fireblade, CB1000R and VFR1200S priced at Rs 9.5-12.5 lakh. “Since 2008, more and more people are buying these bikes,” he added.
The clientele, said Rattan, includes doctors, lawyers, and well-settled professionals in their forties, all of whom are indulging in their passion for superbikes. These high net worth professionals roughly form as much as half the superbike buyers. The rest, aged between 21 and 35, are split between those who buy superbikes as a status symbol and some who look for performance. “A person may have a Mercedes, but he likes to go for a ride on a superbike with his girlfriend,” said Roy Kurian, national business head, India Yamaha Motor. The company sells FZ1, R1, MT-01 and V-Max superbikes priced at Rs 8.5-20 lakh. “This segment doesn’t require promotion. These customers know more about the bikes than the makers,” added Kurian.
Improving road infrastructure in and around big cities is driving bike makers to introduce new superbike models. “Global auto majors are recognising that India is evolving as the next big destination for the super-premium segment,” said Kapil Arora, partner (automotive), Ernst & Young.
Ducati and Harley Davidson set shop in India to sell their imported superbikes costing between Rs 7 lakh and Rs 42 lakh, while BMW Motorcycles will hit the Indian roads later this year. “Demand for superbikes will continue to be driven from big cities which have good roads” said Abdul Majeed, auto practice leader, PwC.
Superbike demand took off after Suzuki Motorcycle India launched the Hayabusa in 2007. The firm also sells Gixxer and Bandit 1250S priced at Rs 8.5 lakh and Rs 12.5 lakh.
Superbike makers also seem to be attacking the premium bike segment between 150 cc and 250 cc at price points of Rs 1 lakh to Rs 2.5 lakh to provide a feel of the bigger superbikes in similar looking but underpowered models. Yamaha, which launched an India-specific R15 model (Rs 103,000) in 2008 based on its global R1 bestseller, has seen huge success with the bike. “Initially, the demand for R15 was for 2,000 units, which has gone up to 4,000 units a month,” said Kurian.
Yamaha building scooter for India market in Japan
India Yamaha Motors India is gearing up to foray into the fast growing scooter segment in the country with an all-new product that parent Yamaha Motor Corporation (YMC) is developing specifically for the Indian market.
Roy Kurian, national business head, India Yamaha Motors, said, “We were studying the Indian market intensively over the last two years to gauge the requirements of customers here. We decided we needed a new product for the consumers here. A product is in development at our R&D centre in Japan, which would be introduced shortly.”
Industry sources indicate a gearless scooter from the Yamaha fold is likely to hit Indian roads by the end of next year.
Kurian, however, declined to specify a definite timeline and technical specifications of the scooter the company is considering for introduction in the Indian market.
Scooters, at present, account for nearly 18 per cent of sales in the overall two-wheeler market in India. The segment is posting strong growth numbers with sales increasing by around 47 per cent between April and January this financial year to 1.7 million units. An electric scooter may also be launched for India in due course.
Additionally, the company is also considering introducing two new motorbikes in India in the course of the year, which may include possible upgrades.
Kurian added, “We want to consolidate our position in the market here. We sold 2.5 lakh units in India last year. This year, we expect to grow by at least 50 per cent and then double the growth rates recorded by the overall two-wheeler industry in the country.”
India Yamaha Motors has sold 228,378 motorcycles in the domestic market till January this year, which is an increase of 21.28 per cent as compared to the corresponding period of the last financial year.
The motorcycle segment in the period has grown by 23.57 per cent to 9.7 million units.
Yamaha, which has 13 models in its portfolio in India, is targeting having 10 per cent share of the two-wheeler market over the next three to four years. The company’s current market share stands at 3.5 per cent. To this end, the company has launched six products in the 150 cc segment and is looking at attaining 20 per cent share in the category in the course of the year. “We are going to introduce top-end products in India and then work our way down the pyramid to lower segments. Our products are known for their technology and now we are seeing demand for 150 cc bikes even from the B and C category towns,” said Kurian.
The company which has two facilities at Surajpur in Uttar Pradesh and Faridabad, Haryana has a combined installed capacity to roll out six lakh units annually.
The capacity can be scaled up to manufacture nine lakh units per annum depending on demand. Yamaha sells products in India through its network of 400 dealers across the country.
Last year, the company had said it would focus more on the Indian market, with more investments, and aimed to have 10 per cent of its total global sales from the country within the next four years.
Roy Kurian, national business head, India Yamaha Motors, said, “We were studying the Indian market intensively over the last two years to gauge the requirements of customers here. We decided we needed a new product for the consumers here. A product is in development at our R&D centre in Japan, which would be introduced shortly.”
Industry sources indicate a gearless scooter from the Yamaha fold is likely to hit Indian roads by the end of next year.
Kurian, however, declined to specify a definite timeline and technical specifications of the scooter the company is considering for introduction in the Indian market.
Scooters, at present, account for nearly 18 per cent of sales in the overall two-wheeler market in India. The segment is posting strong growth numbers with sales increasing by around 47 per cent between April and January this financial year to 1.7 million units. An electric scooter may also be launched for India in due course.
Additionally, the company is also considering introducing two new motorbikes in India in the course of the year, which may include possible upgrades.
Kurian added, “We want to consolidate our position in the market here. We sold 2.5 lakh units in India last year. This year, we expect to grow by at least 50 per cent and then double the growth rates recorded by the overall two-wheeler industry in the country.”
India Yamaha Motors has sold 228,378 motorcycles in the domestic market till January this year, which is an increase of 21.28 per cent as compared to the corresponding period of the last financial year.
The motorcycle segment in the period has grown by 23.57 per cent to 9.7 million units.
Yamaha, which has 13 models in its portfolio in India, is targeting having 10 per cent share of the two-wheeler market over the next three to four years. The company’s current market share stands at 3.5 per cent. To this end, the company has launched six products in the 150 cc segment and is looking at attaining 20 per cent share in the category in the course of the year. “We are going to introduce top-end products in India and then work our way down the pyramid to lower segments. Our products are known for their technology and now we are seeing demand for 150 cc bikes even from the B and C category towns,” said Kurian.
The company which has two facilities at Surajpur in Uttar Pradesh and Faridabad, Haryana has a combined installed capacity to roll out six lakh units annually.
The capacity can be scaled up to manufacture nine lakh units per annum depending on demand. Yamaha sells products in India through its network of 400 dealers across the country.
Last year, the company had said it would focus more on the Indian market, with more investments, and aimed to have 10 per cent of its total global sales from the country within the next four years.
Hero Honda promoters pledge 5.32% stake for about Rs 1,585 cr
NEW DELHI: The country's largest two-wheeler maker Hero Honda toady said its promoter firm Hero Investments Pvt Ltd has pledged 5.32 per cent stake in it with IL&FS Trust Company Ltd for an estimated Rs 1,585 crore.
According to a filing to the Bombay Stock Exchange (BSE), Hero Honda said the promoters have pledged 1,06,16,678 shares, representing 5.32 per cent of the total paid-up capital of the auto major, on March 1.
On the basis of the closing price on March 1 of Hero Honda's scrip on the BSE, the value for the pledged shares comes out to be Rs 1,584.65 crore.
Hero Investments Pvt Ltd (HIPL) is one of the main shareholders of Hero Honda. It holds 17.33 per cent stake in the company as on December 31, 2010.
Last month, Foreign Investment Promotion Board had deferred a proposal of HIPL to bring in foreign equity worth Rs 4,500 crore for clearance by the Cabinet Committee on Economic Affairs.
In December last year, the promoters of HIPL, the B M Munjal family, had agreed to buy out the entire 26 per cent stake of Japan's Honda in Hero Honda for an undisclosed sum.
It is understood that the Munjals are looking to raise funds to finance the buyout through stake sale in HIPL to private equity and other foreign funds.
The shares of Hero Honda today closed 2.15 per cent up at Rs 1,534.45 a piece on the BSE.
According to a filing to the Bombay Stock Exchange (BSE), Hero Honda said the promoters have pledged 1,06,16,678 shares, representing 5.32 per cent of the total paid-up capital of the auto major, on March 1.
On the basis of the closing price on March 1 of Hero Honda's scrip on the BSE, the value for the pledged shares comes out to be Rs 1,584.65 crore.
Hero Investments Pvt Ltd (HIPL) is one of the main shareholders of Hero Honda. It holds 17.33 per cent stake in the company as on December 31, 2010.
Last month, Foreign Investment Promotion Board had deferred a proposal of HIPL to bring in foreign equity worth Rs 4,500 crore for clearance by the Cabinet Committee on Economic Affairs.
In December last year, the promoters of HIPL, the B M Munjal family, had agreed to buy out the entire 26 per cent stake of Japan's Honda in Hero Honda for an undisclosed sum.
It is understood that the Munjals are looking to raise funds to finance the buyout through stake sale in HIPL to private equity and other foreign funds.
The shares of Hero Honda today closed 2.15 per cent up at Rs 1,534.45 a piece on the BSE.
Now, Hero Honda is lead sponsor of Mumbai Indians
NEW DELHI: It’s the Mumbai Indians’ turn to ride Hero Honda. The world’s largest two-wheeler maker has signed a deal to become the lead sponsor of the Mumbai-based Indian Premier League team, ending its three-year association with Delhi Daredevils, a person familiar with the development said.
The three-year deal involves sponsorship money of around Rs 65-70 crore, an executive with a media buying firm said. Hero Honda replaces consumer electronics firm Videocon as the lead sponsor of the Mukesh Ambani-owned Mumbai Indians weeks before the start of the fourth season of the popular domestic twenty20 club tournament in April.
A Mumbai Indians spokesman declined comment on the development. An email query sent to Hero Honda spokesman too was not answered till the time of going to press. Videocon had signed a three-year deal with Mumbai Indians for an estimated Rs 36 crore last year.
The association is being discontinued after one season. Telecom services firm Idea Cellular too has reportedly discontinued a long-term sponsorship arrangement one year ahead of schedule. Mumbai Indians, led by top batsman Sachin Tendulkar, was the runner-up in the last edition of IPL.
Videocon was the lead sponsor of Delhi Daredevils since the tournament began. Delhi team owned by infrastructure group GMR had last month struck a sponsorship deal with Muthoot Finance for an undisclosed amount. Most IPL team
The three-year deal involves sponsorship money of around Rs 65-70 crore, an executive with a media buying firm said. Hero Honda replaces consumer electronics firm Videocon as the lead sponsor of the Mukesh Ambani-owned Mumbai Indians weeks before the start of the fourth season of the popular domestic twenty20 club tournament in April.
A Mumbai Indians spokesman declined comment on the development. An email query sent to Hero Honda spokesman too was not answered till the time of going to press. Videocon had signed a three-year deal with Mumbai Indians for an estimated Rs 36 crore last year.
The association is being discontinued after one season. Telecom services firm Idea Cellular too has reportedly discontinued a long-term sponsorship arrangement one year ahead of schedule. Mumbai Indians, led by top batsman Sachin Tendulkar, was the runner-up in the last edition of IPL.
Videocon was the lead sponsor of Delhi Daredevils since the tournament began. Delhi team owned by infrastructure group GMR had last month struck a sponsorship deal with Muthoot Finance for an undisclosed amount. Most IPL team
Bajaj plans new Discover model
“A new Discover will join the Discover 100 and Discover 150 next month to further the growth of the Discover brand in the domestic and export markets this financial year,” Rajiv Bajaj, managing director, Bajaj Auto, said in a statement.
“The two popular Discover brands with price tags of Rs 43,000 and Rs 48,000 have become a runaway success in the country,” S Sridhar, CEO, two-wheelers, Bajaj Auto, told Financial Chronicle. “It is a great sign that at present there is no stock left of Discover motorcycles in both our Waluj plant in Aurangabad in Maharashtra, and Pantnagar in Uttarakhand.”
“To cash in on the popularity of the Discover brand, we will launch a new model positioned between the 100 cc and 150 cc Discover bikes available at present,” Sridhar said. He claimed that the new model would be a hit with motorcycle enthusiasts in the country and also in overseas markets.
On an average, Discover 100 cc clocks over 75,000 units a month and both models put together do over 1,10,000 units per month in the domestic market, Sridhar said.
The other brand from the Bajaj Auto stable, the Pulsar range comprising the 135 cc, 150 cc, 180 cc and 220 cc models with a price tag ranging from Rs 54,000 to Rs 74,000, sold an average of 65,000 units a month in the domestic market, he said.
The Pune-based company on Wednesday said it had achieved 22.18 per cent jump in sales in February 2011 at 2,86,657 units over the 2,34,623 units sold in February last year, Bajaj Auto said in a statement.
The company’s exports surged to 31.93 per cent at 1,02,433 units in February 2011, up from 77,642 units in February 2010.
Bajaj Auto posted a rise of 18.4 per cent in three-wheeler sales in February this year at 40,217 units against 33,968 units in the same month last year.
The company said total vehicle sales last month were the best for February and stood at 3,26,874 units compared with 2,68,678 units in the same period a year ago, a growth of 21.66 per cent. “For the first time our total sales exceeded 3.5 million vehicles in a given financial year and we achieved this in the period April 2010 to February 2011,” Sridhar said.
The company also exceeded its export target of one million units by selling 11,33,834 units in these 11 months, he added.
Meanwhile, Mercedes-Benz India touched its highest ever monthly sales in February 2011 touching 662 units, a growth of 51 per cent over February last year at 439 units.
Skoda Auto India, a subsidiary of ŠkodaAuto a.s. of the Czech Republic (Volkswagen Group), sold 2,512 units against 1,805 units in February 2010, a growth of 39.17 per cent.
“The two popular Discover brands with price tags of Rs 43,000 and Rs 48,000 have become a runaway success in the country,” S Sridhar, CEO, two-wheelers, Bajaj Auto, told Financial Chronicle. “It is a great sign that at present there is no stock left of Discover motorcycles in both our Waluj plant in Aurangabad in Maharashtra, and Pantnagar in Uttarakhand.”
“To cash in on the popularity of the Discover brand, we will launch a new model positioned between the 100 cc and 150 cc Discover bikes available at present,” Sridhar said. He claimed that the new model would be a hit with motorcycle enthusiasts in the country and also in overseas markets.
On an average, Discover 100 cc clocks over 75,000 units a month and both models put together do over 1,10,000 units per month in the domestic market, Sridhar said.
The other brand from the Bajaj Auto stable, the Pulsar range comprising the 135 cc, 150 cc, 180 cc and 220 cc models with a price tag ranging from Rs 54,000 to Rs 74,000, sold an average of 65,000 units a month in the domestic market, he said.
The Pune-based company on Wednesday said it had achieved 22.18 per cent jump in sales in February 2011 at 2,86,657 units over the 2,34,623 units sold in February last year, Bajaj Auto said in a statement.
The company’s exports surged to 31.93 per cent at 1,02,433 units in February 2011, up from 77,642 units in February 2010.
Bajaj Auto posted a rise of 18.4 per cent in three-wheeler sales in February this year at 40,217 units against 33,968 units in the same month last year.
The company said total vehicle sales last month were the best for February and stood at 3,26,874 units compared with 2,68,678 units in the same period a year ago, a growth of 21.66 per cent. “For the first time our total sales exceeded 3.5 million vehicles in a given financial year and we achieved this in the period April 2010 to February 2011,” Sridhar said.
The company also exceeded its export target of one million units by selling 11,33,834 units in these 11 months, he added.
Meanwhile, Mercedes-Benz India touched its highest ever monthly sales in February 2011 touching 662 units, a growth of 51 per cent over February last year at 439 units.
Skoda Auto India, a subsidiary of ŠkodaAuto a.s. of the Czech Republic (Volkswagen Group), sold 2,512 units against 1,805 units in February 2010, a growth of 39.17 per cent.
Stallio issue not a recall, but proactive intent, says M&M
Mahindra & Mahindra has reiterated that the move to halt supplies of the 110cc Stallio motorcycle to dealerships till June was prompted by a proactive intent to be ‘responsive and sensitive' to the needs of its customers.
“There was a small feedback on the clutch operation being hard which affects the gearshift. For M&M, which is keen on being a long-term player in bikes and scooters, even this was enough to act promptly,” Mr Anoop Mathur, President of the Two-Wheeler Sector, told Business Line.
The 125cc Stallio was launched last November and around 5,000 units were sold till January when the company decided to halt supplies and focus on the problem. “Though the feedback proportion was small and the incidence limited, we decided not to overlook anything because the brand equity of M&M is paramount,” he said.
Long-term interests
According to Mr Mathur, this move could not be perceived as a recall ‘by any stretch of imagination'. The company was aware of the ‘root cause of this variability' and had taken action to have it identified and remedied so that there was no recurrence of this ‘random behaviour'.
“We are now positioning ourselves with the steps we have taken to overcome this variability issue and the Stallio should be ready in mid-June,” he said. M&M, he added, could have chosen to look the other way and ‘overplayed the positives' of the bike but this would have impacted its standing in the market.
“We are here for the long-term, we already have a place in scooters and there is no reason why we cannot replicate this in bikes. Had we taken a myopic view, it would have been damaging to our long-term interests. We are confident of being back on top of the situation,” Mr Mathur said.
It was also his view that this hiatus from the market was of little consequence since the company had faith in the product. “This is not a back-foot game where we are being defensive. Nobody knew us in scooters not so long ago but we are making a quantitative presence in the segment. We are equally confident that despite this phase, the business, brand and customer proposition will stay intact. I see this as an investment for the future,” he said.
Incidentally, M&M has also deferred the launch of its 300cc Mojo sports cruiser which was originally scheduled to hit the roads last month.
“There was a small feedback on the clutch operation being hard which affects the gearshift. For M&M, which is keen on being a long-term player in bikes and scooters, even this was enough to act promptly,” Mr Anoop Mathur, President of the Two-Wheeler Sector, told Business Line.
The 125cc Stallio was launched last November and around 5,000 units were sold till January when the company decided to halt supplies and focus on the problem. “Though the feedback proportion was small and the incidence limited, we decided not to overlook anything because the brand equity of M&M is paramount,” he said.
Long-term interests
According to Mr Mathur, this move could not be perceived as a recall ‘by any stretch of imagination'. The company was aware of the ‘root cause of this variability' and had taken action to have it identified and remedied so that there was no recurrence of this ‘random behaviour'.
“We are now positioning ourselves with the steps we have taken to overcome this variability issue and the Stallio should be ready in mid-June,” he said. M&M, he added, could have chosen to look the other way and ‘overplayed the positives' of the bike but this would have impacted its standing in the market.
“We are here for the long-term, we already have a place in scooters and there is no reason why we cannot replicate this in bikes. Had we taken a myopic view, it would have been damaging to our long-term interests. We are confident of being back on top of the situation,” Mr Mathur said.
It was also his view that this hiatus from the market was of little consequence since the company had faith in the product. “This is not a back-foot game where we are being defensive. Nobody knew us in scooters not so long ago but we are making a quantitative presence in the segment. We are equally confident that despite this phase, the business, brand and customer proposition will stay intact. I see this as an investment for the future,” he said.
Incidentally, M&M has also deferred the launch of its 300cc Mojo sports cruiser which was originally scheduled to hit the roads last month.
TVS Motor’s February sales up 24%
Chennai, March 1: TVS Motor Company has reported a 24 per cent growth on its sales last month. The Chennai-based company has sold 1,77,412 units in February against 1,42,676 units during the same period last year, up by 24 per cent, the company said in a statement here.
The cumulative sales of the company for the period April 2010-February 2011 stood at 18,55,460 units.
Total two-wheeler sales recorded a 23 per cent growth with sales of 1,73,200 units in February 2011 as against 1,40,544 units in February 2010, it said.
The cumulative two-wheeler sales recorded for the period April 2010 to February 2011 grew to 18,20,027 units from 13,75,176 units sold during the same period of the previous year it said.
Domestic sales of the company grew by 25 per cent with sales of 1,51,526 units in February 2011 as against 1,21,403 units in February 2010.
Sales of scooter grew by 49 per cent to 40,335 units from 27,017 units sold in February 2010.
Motorcycle sales grew by 13 per cent in February 2011 to 71,462 units from 63,394 units reported in February 2010.
Sales of three-wheelers almost doubled from 2,132 units in February 2010 to 4,212 units in February 2011.
Total cumulative three-wheeler sales for the period April 2010-February 2011 grew by 181 per cent with sales of 35,433 units as against 12,549 units, it said.
On its exports, the company sold 24,036 units up by 13 per cent over the same month of previous year, it added.
The cumulative sales of the company for the period April 2010-February 2011 stood at 18,55,460 units.
Total two-wheeler sales recorded a 23 per cent growth with sales of 1,73,200 units in February 2011 as against 1,40,544 units in February 2010, it said.
The cumulative two-wheeler sales recorded for the period April 2010 to February 2011 grew to 18,20,027 units from 13,75,176 units sold during the same period of the previous year it said.
Domestic sales of the company grew by 25 per cent with sales of 1,51,526 units in February 2011 as against 1,21,403 units in February 2010.
Sales of scooter grew by 49 per cent to 40,335 units from 27,017 units sold in February 2010.
Motorcycle sales grew by 13 per cent in February 2011 to 71,462 units from 63,394 units reported in February 2010.
Sales of three-wheelers almost doubled from 2,132 units in February 2010 to 4,212 units in February 2011.
Total cumulative three-wheeler sales for the period April 2010-February 2011 grew by 181 per cent with sales of 35,433 units as against 12,549 units, it said.
On its exports, the company sold 24,036 units up by 13 per cent over the same month of previous year, it added.
Feb auto sales surge on duty hike fears...
Domestic passenger car and two-wheeler sales surged in February as customers advanced their purchases in anticipation of an increase in excise duties in the Union Budget that could have made cars and bikes costlier. Market leader Maruti Suzuki India Ltd (MSIL) registered a 20% growth in sales to ov er 1 lakh units during the month over the same period a year ago, even as arch rival Hyundai saw its sales growth slide to 5%.
Tata Motors, Skoda, Toyota and Mahindra&Mahindra also saw high double-digit growth in February sales, with Ford tripling its sales from last year.
“In the latter half of the month we did observe some purchases being advanced as customers were wary of a hike in excise duty or an additional levy on diesel,” said Mayank Pareek, managing executive officer (marketing and sales), MSIL. “We are selling as much as we can produce.”
With the finance minister choosing not to increase excise duties, sales are however expected to moderate in the coming months.
Hyundai chose to play down the disparity in its sales growth as compared to the industry.
“While the industry growth might be unusually high, Hyundai recorded positive growth supported by steady sales of its compact cars,” said Arvind Saxena, director (sales and marketing), Hyundai India. “We expect the average industry growth rate to stabilise in the future months.”
In two-wheelers, all major manufacturers saw double-digit growth, with Hero Honda and TVS registering over 23% growth each.
“Our performance throughout this fiscal has been very consistent,” said Anil Dua, senior vice president (marketing and sales), Hero Honda.
Tata Motors, Skoda, Toyota and Mahindra&Mahindra also saw high double-digit growth in February sales, with Ford tripling its sales from last year.
“In the latter half of the month we did observe some purchases being advanced as customers were wary of a hike in excise duty or an additional levy on diesel,” said Mayank Pareek, managing executive officer (marketing and sales), MSIL. “We are selling as much as we can produce.”
With the finance minister choosing not to increase excise duties, sales are however expected to moderate in the coming months.
Hyundai chose to play down the disparity in its sales growth as compared to the industry.
“While the industry growth might be unusually high, Hyundai recorded positive growth supported by steady sales of its compact cars,” said Arvind Saxena, director (sales and marketing), Hyundai India. “We expect the average industry growth rate to stabilise in the future months.”
In two-wheelers, all major manufacturers saw double-digit growth, with Hero Honda and TVS registering over 23% growth each.
“Our performance throughout this fiscal has been very consistent,” said Anil Dua, senior vice president (marketing and sales), Hero Honda.
Luxury cars, bikes to become expensive
“Premium and luxury cars will become costly. Most new cars are launched through CKD route, which means new cars will become expensive too,” said Vishnu Mathur, DG, Siam. Makers of high-end cars usually import engines within CKD kit, whereas other parts from the CKD kit come dismantled to the country. The engine forms 15-20 per cent of a car’s cost.
Jnaneswar Sen, VP, Honda Siel Cars India, said it wouldn’t impact their Accord sedan, as its engine is assembled in the country. Sandeep Singh, deputy MD (marketing) at Toyota Kirloskar Motor, which assembles Fortuner and Innova, refrained to comment saying it was unclear whether the customs duty was raised. This will also affect CKD models like Bajaj Auto’s Ninja 250R. Harley Davidson that announced CKD operations of its bikes in India is likely to be impacted. NK Rattan, operating head - sales, HMSI, said its soon to be launched sports bike CBR250R CKD model remains unaffected as it makes engines in India. “In India, assembling models through CKD is not a good idea to generate volumes. More firms are expected to start local manufacturing in view of this announcement,” Abdul Majeed of PriceWaterhouse Coopers said.
Besides, small cars registered as taxis will get 2 per cent price benefit as refund has been extended to 20 per cent from 10 per cent under the taxi refund scheme.
Jnaneswar Sen, VP, Honda Siel Cars India, said it wouldn’t impact their Accord sedan, as its engine is assembled in the country. Sandeep Singh, deputy MD (marketing) at Toyota Kirloskar Motor, which assembles Fortuner and Innova, refrained to comment saying it was unclear whether the customs duty was raised. This will also affect CKD models like Bajaj Auto’s Ninja 250R. Harley Davidson that announced CKD operations of its bikes in India is likely to be impacted. NK Rattan, operating head - sales, HMSI, said its soon to be launched sports bike CBR250R CKD model remains unaffected as it makes engines in India. “In India, assembling models through CKD is not a good idea to generate volumes. More firms are expected to start local manufacturing in view of this announcement,” Abdul Majeed of PriceWaterhouse Coopers said.
Besides, small cars registered as taxis will get 2 per cent price benefit as refund has been extended to 20 per cent from 10 per cent under the taxi refund scheme.