M&M could benefit most from excise duty cut

Interim Budget 2014: Excise duty cuts across auto segment roll in, but investors still wary

Facing its worst ever crisis in over a decade, the automobile industry on Monday was pleasantly surprised by the FM's move to jumpstart demand by slashing excise duties across vehicle segments, but investors did not appear to be buying into the story.

Analysts explain a subtle difference between the excise duty cuts in 2009 and 2014. While the excise duty cut in 2009 stimulated demand in 2009, it is not necessarily going to work this time around.

Cars sales surged 25 per cent, while commercial vehicles gained 39 per cent and two-wheeler sales increased 26 per cent in FY2010 on the back of excise duty sops announced by the government. Recovery was visible in a short span of 6-8 months, and demand perked up in the commercial vehicles segment, too.

The mood is different today. Indian automobile industry is in a protracted slowdown and unlikely to see a V-shaped recovery as seen in 2009. Tax push alone is not enough to propel volume growth for the auto sector in this environment. Second, excise duty is only applicable till June 2014, too short a time to set pace for long-term volume growth.

Another legitimate worry among investors is of the probability of pre-buying led volume growth in the short term. This may lull the new government not to extend the benefit. Such artificially constructed demand would give a false impression of a recovery.

The companies would not able to hike prices so smoothly after four months and if demand revival remains fragile, then it would significantly hit margins and volume growth. Third, the Street is having a perception that the government is now playing an indirect strategy to stimulate growth.

The emphasis is to promote consumerism by lowering prices of vehicle and drive the volume growth. However, government will garner more tax revenue, corporate tax and dividend distribution, which offset revenue forgone from excise duty.

The Street perception is lower prices for vehicle will only solve partial problems temporarily. There are other factors such as interest rate, depreciation allowance, ability to payback and macro environment to decide purchasing decision, particularly for commercial vehicles.

The excise duty will only be able to drive volume for the passenger car segment where a price cut of 3-5 per cent can allure a potential customer to buy car. The principal beneficiary of excise duty in this case will be Maruti and M&M.

Analysts expect about 3 per cent and 5 per cent volume growth in FY15 for Maruti and M&M, respectively, in the passenger vehicle segment and tax sops to add 3-4 per cent for additional volume growth for both these automakers.

Maruti is currently offering an average cash discount of Rs 18,000 for some models, which may evaporate with volume growth kicking in and is likely to perk up average realisation.

India's first 150cc automatic scooter

LML Star Euro 150cc Automatic Scooter launched at INR 54,014

LML announced the launch of its 150 cc Star Euro Automatic scooter yesterday. Priced from INR 54,014 (ex-Showroom, Gujarat), the LML Star Euro 150 is India’s first 150 cc automatic scooter with a full metal body claims LML.

The scooter measures 1,760 mm in length, 695 mm in width, 820 mm in height and 1,260 mm in wheelbase. It has a ground clearance of 160 mm and weighs 112 kg. The Star 150 gets a 7-liter fuel tank and LML claims a fuel efficiency of 55 km/l.

The engine is a single-cylinder, four-stroke, forced air-cooled unit with two valves and produces 9.38 hp (± 0.33 hp) at 8,000 rpm (± 200 rpm). A CVT gearbox transfers the power. The top-speed of the Star 150 is rated at 90 km/h.

The scooter is based on a semi monocoque structure having pressed steel sheet in front and tubular frame in rear. Hydraulic dampers and helical springs provide the suspension duty on the Star 150. Braking power comes from drum brakes at the front and rear. However, a front disc brake will be provided as an option.

The scooter is available in 7 colors including a multi-shade color. Features in the scooter include a glove compartment, engine kill switch and a speedometer with economy and power modes.

TVS Motor company has announced cut in prices

TVS Motor Company today announced cutting prices by up to Rs 3,500 across its product portfolio following excise duty reduction announced in the interim Budget.

"In keeping with TVS Motor Company's tradition of trust and transparency, the benefit of the excise duty reduction has been passed on to the consumers through price reduction ranging between Rs 850 and Rs 3,500 on the entire range of two and three wheeler models," TVS Motor Company Vice President Sales J Srinivasan said in a statement.
The company has also worked out a mechanism to support all our channel partners so that the benefit of the price reduction is available to the consumers even on existing stock, he added.

The company sells various motorcycle models, including Star City and Apache RTR and scooter models like Jupiter and Wego.

Besides, the company also sells three wheelers. In the interim Budget 2014-15, Finance Minister P Chidambaram had announced reduction of excise duty on small cars, scooters, motorcycles and commercial vehicles to 8 per cent from 12 per cent earlier; 24 per cent from 30 per cent on SUVs; 24 per cent from 27 per cent on large cars; 20 per cent from 24 per cent in mid sized cars.

Other two-wheeler makers, Yamaha, Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI) have also announced price cuts after the excise duty cut.

Honda cuts two-wheeler price by upto Rs 7,600

Honda Motorcycle & Scooter India (HMSI) today cut prices of its products by up to Rs.7,600 after the excise duty reduction announced in the Interim Budget 2014-15.

"Honda welcomes excise duty relief given to auto industry in the interim Budget... Honda has decided to pass the full benefit of 4 per cent excise duty reduction on two-wheelers to its valued customers across India with immediate effect," HMSI said in a statement.

The price benefit starts from minimum of Rs.1,600 on Dream Neo motorcycle, priced between Rs.43,150 and Rs.47,289, and goes up to Rs.7,600 on CBR 250R performance bike tagged between Rs.1.58 lakh and Rs.1.93 lakh (ex-showroom Delhi).

HMSI sells a range of scooters including the Activa and Deo, and motorcycles such as Dream Yuga, CB Stunner, CB Unicorn and CB Twister among others.

Presenting the Budget yesterday, Finance Minister P Chidambaram announced reduction in excise duty on small car, motorcycles, scooter and commercial vehicles to 8 per cent from 12 per cent, and on SUVs to 24 per cent from 30 per cent.

Large cars also saw excise reduction to 24 per cent from 27 per cent earlier, and mid sized cars to 20 per cent from 24 per cent.

Suzuki set to scale up gurgaon plant capacity

Two-wheeler maker Suzuki Motorcycles will scale up their capacity from 5.4 lakh to 6 lakh units at their Gurgaon plant.

Speaking to Express,  Atul Gupta, Executive Vice President, Suzuki Motorcycles India said that that they had an initial investment of Rs 550 crore and the same would suffice for their expansion plans in the existing manufacturing plant. It currently produces close to 5 lakh units per annum and can scale up to 5.4 lakh before the expansion is completed.

On recent excise cuts and its impact on sales, he said, “it’s true that it (duty cuts) will not give the same impetus for sales but this would help set up the platform for increased sales from 2015.” He said that the two-wheeler market has been flat and is expected to be the same this year. However, he clarified that the situation in the two-wheeler market is better than the passenger car segment. The company has been growing at close to 10%.

The two-wheeler category registered a growth of 5.76% during the period from April-January while motorcycle grew at 2.65% in the same period. Exports on the other hand saw the two wheeler category grow at 5.27%.

The company, which has a high urban customer centric focus will now look at rural markets as well. “We still have to make inroads into rural markets and will look to strengthening this area,” he said. The company has 600 touch points as on date and will take this to 1,000 by March 2015, he said.

On their introduction of super bikes into Indian markets, he said that this was more a ‘status symbol’ and ‘brand and technological’ showcase for the company and their bikes were now coming in as CBU (completely built units).

Drift with continental

This Royal Enfield addition to the stable is all it’s cut out to be and more, says Tarun Goswami

OVER the years, biking has come to comprise more than mere commuting. Several motorcycle clubs have mushroomed across India and even lady bikers have set-ups that proclaim their gender’s no mean ability.

Indeed, a merry picture of bike lovers haring off on long-distance adventures. To meet the many challenges of the road, bikes with powerful engines, matching maneuverability and easy handling are a must.

This said, Continental GT is Royal Enfield’s new addition to the stable. This two-wheeler has already created a stir among enthusiasts and senior Enfield officials feel it will sell well.

The first Continental GT was introduced almost five decades ago in England and users would visit joints situated along the highways. The modern version has all the desired mod-coms — disc brakes on both wheels, a low handlebar with low rear footpegs to facilitate long-distance runs, a 535-cc single-cylinder, four-stroke air-cooled engine that make light of whatever terrain. The digital electronic ignition system adds to driving pleasure.

It has often been seen that on hilly tracks Royal Enfield bikes create problems because of the weight. A few days back, a long-distance enthusiast who had visited the Everest base camp to get his name into the Guinness Book of World Record told me that on a trip from Managram in Uttaranchal, a couple of Enfield bikes could not complete the tour as their riders found it difficult to handle their machines on the rocky, hilly roads. The GT negates all these ills because it is light and ideal for hilly terrain.

Set up in 1901, Royal Enfield manufactures bikes that are loved and respected by lovers of rugged moving machinery, irrespective of age. The new Enfield bikes are easy and a real pleasure to manoeuvre. With better fuel efficiency, these are the natural choice for rough roads.

It was in the early 1990s that Enfield introduced its single-cylinder 500-cc bikes and I was among the first lot to buy an Enfield 500 in eastern India. The bike had far superior road grip and driving power. This model was later upgraded to the Thunderbird. Work on produce a 535-cc bike more than a decade ago and after carrying out a series of experiments the Gt is now on the road. Priced at over Rs 2 lakh, it has been meticulously put together and is ideal for Indian roads.

Many foreign bike manufacturers have opened units in India but their bikes developing snags because of Indian roads that restrict speeds of more than 100 kmph. The GT eclipse these negatives, so feel free to do test drive and feel the power and beauty of Enfield expertise.

Yamaha cuts two-wheeler prices

Yamaha Motor has cut prices of its two-wheelers by up to Rs 3,066 across models following excise duty reduction announced in the Interim Budget.

“The company has decided to pass on the differential amount to the dealers on their existing as well as transit stock in order to enable them to immediately extend 100 per cent benefit to the customers,” Yamaha Motor India Sales said in a statement.

The price cut ranges from Rs 1,033 to Rs 3,066 depending on the variants, it added.

Yamaha sells scooters Alpha, Ray Z and Ray and a range of motorcycles in India.

Bajaj to deepen Kawasaki, KTM tie-ups

Motorcycle maker Bajaj Auto is building on its partnerships with Japan's Kawasaki Heavy Industries Ltdand Austria's KTM AG as it looks to increase exports of its bikes to fuel growth.

Bajaj is already India's top exporter of motorcycles and three-wheelers, being well established in some neighbouring and African markets, and has this year weathered weak domestic demand thanks to higher export revenue.

"What we had not addressed up until recently was broadly two markets - one the markets of ASEAN and Brazil, which are very large motorcycle markets, and of course the very developed and mature markets of U.S., Europe, Japan and Australia," its Managing Director Rajiv Bajaj told Reuters.

The company plans to sell its bikes in ASEAN, the regional grouping of Southeast Asian countries, andBrazil through Kawasaki, with which it has an existing marketing agreement and sells bikes in the Philippines and Indonesia - markets where it does not have its own network or where the Bajaj brand is less well known.
"In the next 12 months, we hope that we can address some more markets together, perhaps markets likeThailand or Malaysia in the ASEAN region and, hopefully Brazil as well, as far as Latam as concerned," Bajaj said.

The company will use its partnership with KTM, in which it has a 48 percent stake, to sell more in developed markets, such as the United States, Europe, Japan and Australia.

At its facility in Chakan in western Maharashtra state, Bajaj made one out of three KTM bikes sold worldwide last year, according to Bajaj, who expects that to rise to one out of two by 2017.

"It is in this manner that we try to build our export business model - some markets as Bajaj, by Bajaj. Some markets as Kawasaki Bajaj, through that partnership, and in some markets as KTM."

Budget effect: Auto-makers cut prices

Major automobile companies on Wednesday cut prices two days after Finance Minister P Chidambaram reduced the excise duty on vehicles. The carmakers hope this will give them a much-needed sales boost.

Across the board

Maruti Suzuki has slashed prices by ₹8,502 to ₹30,984, and Hyundai Motor India by ₹10,000 to ₹1.35 lakh across all models, said statements by the companies.

Maruti also cut the price of its recently launched compact car Celerio by ₹13,615. It had announced a price of ₹ 3.90 lakh-4.96 lakh ex-showroom Delhi for the different variants.

These price cuts, effective from Wednesday, will be over and above the discounts the companies were already giving. For example, if Hyundai Eon has a base price of ₹2.97 lakh (ex-showroom) and there was a discount of ₹12,000 on this price, it will now get cheaper by ₹22,000 (with the ₹10,000 additional cut) ex-showroom.

“The Finance Minister has given some hope to the industry by reducing excise duties and we will also pass on the benefits to customers. These price cuts will be above all discounts we are already offering to customers on select models,” confirmed Rakesh Srivastava, Senior Vice-President (Sales and Marketing), Hyundai Motor India.

Volkswagen has reduced the prices of the Polo by ₹18,000-₹31,000, Vento by ₹14,500-27,000 and Jetta by ₹38,000-51,000.

Utility vehicle manufacturer Mahindra & Mahindra has reduced prices by ₹13,000 to 49,000. The company will also reduce the price of its premium SUV, the Rexton, by up to ₹92,000.

Honda Cars India (HCIL) announced ₹14,650-₹44,741 reductions across all models.

“The reduction in duty will give the necessary boost to consumer demand and fuel growth in the auto industry,” said Jnaneswar Sen, Senior Vice-President (Marketing and Sales), HCIL.

Two-wheelers companies such as Hero MotoCorp and Honda Motorcycle & Scooter India have also cut prices by up to ₹4,500 and ₹7,600, respectively.

Luxury cars, too

Luxury car makers Audi India and Mercedes-Benz India had announced reduced prices on Monday itself. The Audi A4 sedan’s (base) price is now ₹29.85 lakh from ₹30.58 lakh earlier.

Mercedes-Benz India has cut the prices of its C-class, E-class and GL-class by ₹55,000 to ₹2 lakh.

The Finance Minister on Monday had announced reduction in excise duty from 12 per cent to 8 per cent on small cars, two-wheelers and commercial vehicles and from 30 per cent to 24 per cent on sport utility vehicles.

The excise duty on large and mid-segment cars was brought down to 24 per cent and 20 per cent, respectively.

(This article was published on February 19, 2014)

Big n' burly bikes buzz loud in motown.

They form a tiny niche in India’s volume-heavy motorcycle market. But when it comes to growth, super bikes are in top gear on Indian roads. Riding on the home-grown Royal Enfield along with some iconic global brands like Harley Davidson, Triumph, Suzuki, Yamaha and Honda, the creamy layer of the motorcycle market, the 10,000 unit strong segment is attracting enough eyeballs and customer interest for the players to kick in with more models, greater localization and network expansion.

    Take Royal Enfield, still the brand with the largest footprint in the 250cc-plus motorcycle market. Despite the slowdown, RE is revving up both volumes and profitability. “We produced and sold 180,000 units in calendar 2013 and we are aiming for 250,000 units in 2014,” said Siddhartha Lal, MD & CEO, Eicher Motor Ltd, the parent company for Royal Enfield. “We’re actually gunning to cross that target so demand is higher.”

    With the Continental GT just out in the market, RE is also firing on all cylinders, delaying its production revamp to squeeze out more volumes from both its old and new plants near Chennai. “The transition from the old plant to the new will be slower so the old plant brings in more capacity this year,” said Lal. “We’re adding phase 2 and 3 as we ramp up for 2014 and 2015. The new site should give us 600,000 units ultimately.”

    Harley Davidson, the first of the goliaths, has just rolled out its first “new platform family” with the aggressively priced Street 750. “It’s the first new platform for us in 14 years and the aggressive pricing (just over . 4 lakh) should bring us a new set of customers,” said Anoop Prakash, MD, Harley Davidson India. “We will have more models and variants off this platform. We now have 4,000 Harley owners in India since 2010 and we expect to clock high double-digit growth this year.”

    The super bike market – excluding RE – currently makes up for around 10,000 units a year. Of that, the top end – in the . 5 lakh plus category – comprise a mere 3,000 units. Compare that to the roughly 800,000 bikes sold every month in India and the disparity becomes obvious. As does the potential. “Back in 2008-9, this segment was just 450 units a year,” said Vimal Sumbly, MD, Triumph Motorcycles India. “This market took off when Harley set up shop in India.” British heritage brand Triumph is camping here with its “full range of 10 models and we’ve already got 160 bookings from our first unveiling in Mumbai, Bangalore and Hyderabad. We should hit 500 units by end-March and 1000 units by the end of calendar 2014,” he said.

    One of the reasons why global super bike brands are kicking up some action in India, despite the small numbers, is the way the luxury end of the automobile market has managed to buck the slowdown that’s now blighted India’s once shining growth story. As Indians scale up from commuter bikes to more performance-oriented models, the trickle-up will benefit these leisure segment products as well. Said Shirish Kulkarni, MD, DSK Motowheels which handles the Hyosung brand in India: “The 250cc segment will soon be what the 150 cc commuter-plusperformance segment used to be just a couple of years ago. The 250-600cc segment should grow upwards of 20%.”

BAJAJ UNVEILS NEW PULSAR AT THE 2014 AUTO EXPO

From motorcycling enthusiasts to car lovers, Bajaj Auto has something for all at the 2014 Indian Auto Expo. We take a closer look at what Bajaj has planned for the upcoming year

If there was one thing that enthusiasts and autojournos were looking forward to, it was without doubt visiting the Bajaj Auto Stall at the 2014 Indian Auto Expo. And boy oh boy! It did it live up to expectations and in fact even more. The leading twowheeler manufacturer of India today took the wraps off the two models that will soon be added to its Pulsar lineup - the sports cruiser Pulsar CS 400 and the sportier Pulsar SS 400. Like the 200 Duke and the Pulsar 200NS, both these models will also share some engine parts with the KTM 390 Duke. Mated to a six-speed transmission, both these Pulsars will be powered by a 375cc liquid-cooled, 4-valve triple spark engine with Fuel injection. While the spy shots of the Pulsar SS 400 have already started making their rounds on the internet, it might just be a while before these models finally hit the production lines.

Aside from both these motorcycles, the U Car concept also managed to turn a lot of heads at the Bajaj Press conference today. The U Car is the passenger version of the RE 60 that Bajaj showcased at the 2012 Auto Expo. The company claims that this quadricycle will even be lighter than the 400kg RE60. U Car too will host a liquid-cooled, 4-valve, triple spark engine with fuel injection. This front-wheel drive car will be mated to an automatic transmission.

Last year's show stopper, the Bajaj RE 60 was also seen at the Pune-based manufacturer's stall aside from the Discover range of motorcycles.

Bajaj Akurdi plant staff get Rs 10,000 hike in wages

Workers of Bajaj Auto's Akurdi plant got a R10,000 hike in their wages after their union, the Vishwakalyan Kamgar Sanghatana (VKS), signed a wage agreement with the company on Monday. This has renewed hope for achieving a wage settlement at the Chakan plant soon, Dilip Pawar, president of the union said.
At present, there is no production on at the Akurdi plant and workers are used for non-production work at the Bajaj Auto R&D centre and the tool room located here.

The Akurdi plant has only 130 workers and the larger chunk of workers are at the Chakan plant. But after this agreement, the union is positive about the prospects of the Chakan unit to reach their wage agreement.
Negotiations are on at the Chakan plant after workers ended their 50-day strike and resumed work in August 2013.

The VKS has threatened to go on an indefinite hunger strike from February 16 after suspension of the some of the workers. The Chakan plant has 1,000 permanent workers who are part of the VKS union.
The Chakan plant also has another 1,000 workers at Chakan who are either on contract or under training and apprentice schemes.

Meanwhile, the company on Tuesday reported that its sales declined by 14.36% to 1,67,869 units from 1,96,023 in the same month last year.

Bajaj Akurdi plant staff get Rs 10,000 hike in wages

Workers of Bajaj Auto's Akurdi plant got a R10,000 hike in their wages after their union, the Vishwakalyan Kamgar Sanghatana (VKS), signed a wage agreement with the company on Monday. This has renewed hope for achieving a wage settlement at the Chakan plant soon, Dilip Pawar, president of the union said.
At present, there is no production on at the Akurdi plant and workers are used for non-production work at the Bajaj Auto R&D centre and the tool room located here.

The Akurdi plant has only 130 workers and the larger chunk of workers are at the Chakan plant. But after this agreement, the union is positive about the prospects of the Chakan unit to reach their wage agreement.
Negotiations are on at the Chakan plant after workers ended their 50-day strike and resumed work in August 2013.

The VKS has threatened to go on an indefinite hunger strike from February 16 after suspension of the some of the workers. The Chakan plant has 1,000 permanent workers who are part of the VKS union.
The Chakan plant also has another 1,000 workers at Chakan who are either on contract or under training and apprentice schemes.

Meanwhile, the company on Tuesday reported that its sales declined by 14.36% to 1,67,869 units from 1,96,023 in the same month last year.

2-wheeler makers shift focus towards scooters

AUTO Expo 2014 revealed increasing competitive intensity in scooters, premium bikes and entry level sedans. While executive segment motorcycles lacked the zing, premium bike riders would be spoilt for choices from not only Hero and Bajaj Auto but also Harley, Triumph and Aprilia. Hero showcased 3 new scooters; Honda, TVS, Suzuki, Yamaha are all launching a scooter each to enhance their portfolio. The entry and executive segment motorcycles lacked the zing this season with no notable launches/showcases. The limelight was taken by scooters where Hero Motocorp surprised us with 3 launches - while the 110cc Dash was expected to be showcased, we did not expect the showcasing of the the 125cc Dare (we feel this could be a volume garnering product) and the 150cc Zir, both of which look quite good. Honda, TVS, Suzuki, Yamaha are all launching a scooter each to enhance their portfolio – Honda’s 125cc Activa and TVS 110cc Scooty could definitely add further volumes for the respective OEMs. Bajaj Auto as expected gave the segment a miss. Premium bike riders too are likely to be spoilt for choices with both Hero and Bajaj Auto further adding to their portfolios with Hero adding 220cc/250cc products and Bajaj Auto going further premium with 400cc products.

Chakan staff reject Bajaj offer of rs 10000 raise

Bajaj Auto offered a Rs 10,000 wage hike to its workers at the Chakan plant on Saturday night, few hours before the workers' union president was to begin his indefinite hunger strike.

The management displayed the notice at night when the workers of the second shift were on duty. The wage hike was to come into immediate effect after a written acknowledgement from the workers.

A notice signed by Kailas Zanzari, vice-president, motorcycle (manufacturing), proposed wage hike in three slabs — a raise of Rs 10,000 for workers with five and above years of working experience, Rs 9,500 for workers with three to five years of experience and Rs 9,000 for workers with up to three years of experience.

On Sunday morning, the union held a meeting and decided to postpone the hunger strike call. But the recognised union, Vishwa Kalyan Kamgar Sanghatana (VKS) and its president, Dilip Pawar, have rejected this new offer.

Pawar, who was to start his fast on Sunday, told workers that he has taken this decision to
postpone the fast to allow for one last chance to resolve the issue with the management.

Pawar said the union was not given a copy of the notice and no worker was going to sign such an agreement and this was not the legal way of doing it. “We will seek legal opinion on this matter and decide our next move,” Pawar said. The union also saw this as an attempt the disrupt the unity of the union. “We want a uniform wage hike,” Pawar said.

Zanzari stated that management’s offer on the wage package was final and there could be no further discussion on this beyond what was offered and displayed on the notice board. This was the final offer as far as CTC was concerned but if they had other issues the company would continue to meet and discuss, Zanzari said.

The company in a statement said the R10,000 hike was the best in the Chakan belt. But the workers said companies such as JCB had given a higher raise to its workmen and they wanted Bajaj

Egypt two-wheeler import ban likely to hit Bajaj Auto hard

Egypt's Cabinet has proposed to impose a 12-month ban on imports of two- and three-wheelers, a move that could spell a big setback for Bajaj Auto's exports.

The ban is not final yet, but if implemented could impact Bajaj the most, as its exports to the African nation formed about 6% of Ebitda in the third quarter of 2013-14, analysts said.

The Egypt Cabinet authorised its ministry of finance to go ahead with the ban on February 12, a move primarily designed to give a leg-up to its fledgling automobile industry. It's the export earnings that helped Bajaj Auto cushion the blow on earnings growth in 2013-14, when domestic volumes declined.

Analysts were quick to weigh in on the move. As the prospect of a probable export ban looms, Morgan Stanley moved its stock rating to "equal-weight" from "overweight" and revised the price target to 1,983 from 2,124 a share. Morgan Stanley's Binay Singh and Yashesh Mukhi, in a note to investors titled 'Export Visibility Decreasing; Move to EW', said: "Our Overweight rating on Bajaj rested on exports outgrowing domestic and weak currency benefit offsetting domestic inflationary pressure. The potential import ban in Egypt puts this at risk. Upside to our price target is just 4%, risk-reward at current level is not attractive".

Egypt constitutes a vital export market for Bajaj Auto, since it contributed 31% of the total three-wheeler exports and 3% of the two-wheeler exports in 2012-13. Analysts think it could lead to a downward revision of FY15 earnings per share (EPS) by as much as 7%. In an e-mail response to ET's queries, Rajiv Bajaj, managing director of Bajaj Auto, said: "Since we are given to believe that a final decision will be taken by the appropriate Egyptian authorities only next week, we cannot offer any comment on this matter today."

The shares of Bajaj Auto lost 3.23% to 1,839 on the BSE on Friday. According to Bloomberg, consensus EPS estimate for FY15 stands at 135.48, a share that implies growth of 14.82% year-on-year.

The earnings growth of 15% for FY15 now would be at risk, given that the Street was factoring in an export volume growth of 15%.

Eicher Motors to pump in Rs 600cr to ramp up bike production capacity

Eicher Motors plans to invest Rs 600 crore in two years to ramp up production capacity of its motorcycle division Royal Enfield and also to develop new global platforms as well launching new bikes starting 2016.

Royal Enfield is looking to complete work at its Oragadam facility in the next two years thereby taking the total capacity across the two plants to over 5 lakh units annually by 2016. It had produced a total of 1.78 lakh bikes in 2013.
"We will be making an investment of Rs 600 crore in Royal Enfield towards capacity expansion and development of new global product platforms over 2014 and 2015," Eicher Motors Ltd MD and CEO Siddhartha Lal told reporters here.

The investment will go into capacity expansion, improving research and development (R&D) infrastructure and adding new products, he added.

"Last year, we had set a production target of 2.5 lakh units for 2014, but now it has been revised to 2.8 lakh units considering the demand for our bikes in the market," Lal said.

By 2015-end the Oragadum plant would be completed fully thereby taking the total capacity to around 5 lakh units per annum, he added.

Lal said the additional capacity would help in reducing the waiting periods for various models.

When asked about the new product platforms, Lal said: "In the next 5-7 years horizon, we will be entirely focused on the mid sized motorcycle segment (250 cc-750 cc). We do not have any intention to enter below or above this segment."

He added that the new platforms are being developed keeping in mind global ambitions of the company.

"We are working on multiple platforms. What will be the final outcome can't be known now," Lal said.

The company, which sells Bullet, Classic, Thunderbird and Continental GT models, is also looking to enhance its dealer network in the next three years.

"We currently have around 300 dealerships across the country. In the next 2-3 years this number would grow to around 500," Lal said.

Commenting on the the recently introduced 'Pro Series' range of trucks in the 5-49 tonnes segment, Lal said the entire product range would be out in the next 18 months.

When asked about progress on the 50:50 joint venture with US-based Polaris Industries, he said:"It is well on track for a commercial launch in 2015."

"We are trying to create a new segment in personal four wheel space. It is an on road personal vehicle, a new segment, which we are trying to create," Lal said when asked about JV's product development plans.

TVS motor showcased Scooty Zest in Autoexpo 2014

TVS Motor Company showcased its iconic model, TVS Scooty, this time in an all new avatar. The new scooter, named TVS Scooty Zest, is an ideal mix of weight, dimension and handling and is propelled by a larger zippy 110cc engine which delivers best-in-class fuel economy while ensuring better pickup and ride comfort.The all new TVS Scooty Zest embodies elegance while flaunting a design language that invokes expressions of fun, freshness and freedom for young girls. Its soft form blends smoothly with crisp and fluid lines and tense highlights.

Commenting on the new model, Mr Aniruddha Haldar, Head of Scooters, TVS Motor Company, said, “With TVS Scooty Zest , we have taken the Scooty brand to the next level. TVS Scooty Zest now gets fresh and contemporary styling which is trendy and reflects the femininity of the brand. The enhanced engine capacity gives it a more peppy ride. We have also introduced several new features which will enhance the value of product. “

An array of new and exciting features along with perfect ergonomics and comfortable seating assures a peppy and stress free ride. Designed to partner the independent woman of today, TVS Scooty Zest will be available in vibrant colours and comes with the promise of being a stylish and agile commuter.

The company is scheduled to launch TVS Scooty Zest in the next few months.

Bike makers rev up focus in sports segment

Anticipating more buyers in the premium sports segment, motorbike makers are now looking to spruce up their portfolios in the coming months, with about 10-12 launches lined up for this year.

Bajaj, Hero and TVS, among others, are bullish about the sports segment (150cc to 400cc) to grow in volumes — from 14.6% now to about 25-30% of the total market in three years.

“In the past seven to eight years, the share of the premium segment has increased from 10% to 17% in the industry. With improved road network and affordability, and with people upgrading to the powerful/leisure category, there exists a clear case of volume growth far superior than that in the mass market segment,” says Aashiesh Agarwaal, head (research), Edelweiss Financial Services.

Bajaj Auto, which dominates the segment with its Pulsar range, and holds 35% market share in the sports category, showcased two new variants — Pulsar CS 400 and the Pulsar SS 400 — at the recent Auto Expo. These bikes will be launched in the current fiscal and are expected to cost over Rs 1.5 lakh. The company also markets Kawasaki Ninja 250R and KTM 200 Duke in India.

“We already enjoy a dominant market share in the segment and want it to grow. For us, Pulsar is the model that represents the sports segment and that’s where our new offerings are,” says K Srinivas, president (motorcycle business), Bajaj Auto.

Rival Hero MotoCorp, too, displayed a 250cc bike, Hero HX 250R, developed with technology partner Erik Buell Racing, at the Auto Expo — a step up from its most powerful 225-cc Karizma ZMR. The bike, seen as being more powerful than its nearest competitor, Honda CBR 250R, is expected to be priced around R1.3 lakh. Suzuki, which is looking to grow its portfolio in India, aims to launch the Gixxer 155cc, 4-stroke engine bike, along with the 250cc Inazuma over the next few months. Mahindra, too, took the covers off its much awaited 300cc Mojo motorcycle.

“The premium segment might be impacted in a slowing economy. However, once the market recovers, the segment will grow much faster,” says a Hero

Bajaj claims sabotage by staff at chakan plant

There is worker unrest at Bajaj Auto's Chakan plant near Pune, according to the company. The management claims "some of the union activists are sabotaging machinery/equipment, causing deliberate production loss" and "creating an atmosphere of terror by agitations in the plant".

The unit makes the Pulsar and KTM range of motorcycles. It had seen a 50-day showdown between management and workers over pay rise and reinstatement of suspended workers last year. Later, the management decided to give a phased increase in pay of Rs 10,000 a month.

"The Vishwa Kalyan Kamgar Sanghatana (VKKS) is making irrational demands in the case of the Chakan plant, where the workmen have much lesser experience than the Akurdi (its other Pune factory) workmen. The raise of Rs 10,000 a month given to the Chakan workmen with five years of work experience is the same as that of Akurdi workmen with experience of 25 years of service and is the best rise in the Chakan industrial belt," the company stated. The average cost-to-company of a Chakan workman was now about Rs 35,000 a month, the company said.

VKKS is the recognised workers' union at the partially closed Akurdi plant, also the company's headquarters. The union has been accused by Bajaj of trying to influence workers at Chakan, where there is no union. VKKS signed a memorandum of understanding with the Bajaj management for a wage revision of Rs 10,000 earlier this month for Akurdi. "...the workmen (at Chakan) are going through appropriate disciplinary proceedings. Management wishes to inform that Bajaj Auto continues to believe in its fair and firm approach towards industrial relations," Bajaj Auto added.

Wheelz 2014 kicks off

Days after the high profile auto expo organized by the Confederation of Indian Industry (CII) concluded in Delhi, the chamber flagged off Wheelz 2014, an auto expo on a smaller scale. This year, nine car manufacturers and five twowheeler companies are participating at the fare, showcasing more than six dozen products that range from scooterettes priced Rs 30,000 to luxury cars with sticker price of over Rs 1 crore.

    While this is the third edition of Wheelz, this year it is being viewed with added significance by the auto industry as it offers a last gasp opportunity to shore up sales before the fiscal draws to a close. With the industry recording a sales drop across segments, auto manufacturers are hoping the excitement generated by launches at the auto expo will translates to footfall at Wheelz and convert a portion of enquiry into sales.

    Among the cars that have made it to the Wheelz from the Auto Expo are the new generation Honda City, Maruti’s latest hatch Celerio featuring the auto gear technology, Tata’s Nano Twist and Vista Tech, Hyundai's new generation Santa Fe. The disappointment is with Force Motors that has showcased the old variant of its premium SUV Force One. The other car makers present are Fiat and Chevrolet.

    At the luxury end of the car market, BMW has showcased the SUVs X1 and X3 as well as the sedans 5 Series and 7 Series. Mercedes-Benz, on the other hand, displayed the B Class tourer and M Class SUV while offering two sedans — C Class and E Class — for test drives.

    Among two wheelers, the spotlight is firmly on Harley Davidson that displayed the Fat Boy, Iron and Super Low. In addition, Honda Motorcycle & Scooter India and Hero Motor Corp, the number one and two in the Indian bike and scooter industry have a high decibel presence with the entire range. TVS and Mahindra Two Wheelers have also displayed their portfolio. Biking gear outfits have also set up two stalls.

    CII principal advisor Subrata Niyogi is confident Wheelz will draw the crowds. “The display of several new models should kindle interest in cars. While scope for taking test drives and registering sales in the Delhi auto expo is limited, the industry is expecting good business at Wheelz,” said Niyogi. In fact, the participation by companies is the highest this year at 22 against 12 in the first edition and 16 in the second.

Siam looks to govt for support as auto sales fall

Showing no signs of revival, passenger vehicle sales in the country during January fell by 9.3 per cent as compared to 2.42 lakh units sold during the same month last year, according to data released by the Society of Indian Automobile Manufacturers (Siam) today.

“There is no respite for the auto industry. We hope, from the government, that in the vote-on-account there will be some support for the auto industry. The situation now is worse than FY09, when the government had provided relief to the industry with policy support,” Siam deputy director general Sugato Sen was quoted by PTI on the sidelines of the Auto Expo.

Sales of domestic cars during the month fell by 7.59 per cent to 1.6 lakh units compared to 1.7 lakh vehicles sold during the same month of 2013.

Maruti Suzuki India in January posted 6.88 per cent decline in its domestic sales at 82,461 units as against 88,557 in the same month last year. Hyundai Motor India Ltd also posted 2.61 per cent dip in sales during the month at 33,351 units. Tata Motors saw its sales decline by 24.38 per cent to 8,463 units from 11,192 in the same month last year. Honda Cars India, however, saw its sales increase nearly three-fold to 15,597 units in the month from 5,421 in January 2013 primarily on the back of Amaze and new City.

Total commercial vehicle sales were down by 20.93 per cent to 49,987 units from 63,218 units, while medium and heavy commercial vehicles were also down by 17.42 per cent at 15,769 units as against 19,095 units in the same month last year.

Motorcycle sales in January grew by 4.04 per cent to 9,22,323 units from 8,86,521 in the same month last year.

On the contrary, market leader Hero MotoCorp and Bajaj Auto registered a decline in sales. While Hero saw its domestic bike sales decline marginally to 4,89,322 units in January from 4,94,109 in the year-ago month, Bajaj Auto’s sales declined by 14.36 per cent to 1,67,869 units from 1,96,023 in the same month last year.

Quadricycle policy rides forward to Road Ministry

The much awaited policy on Quadricycles has crossed the final hurdle, as the Union law ministry has cleared the proposal and forwarded the policy document for final notification to the Ministry of Road Transport & Highways for creating a new category of vehicles. The Law Ministry has cleared the proposal late last week, a source close to the development said.

 The onus is now on the Ministry of Road Transport and Highways to issue a final notification , a move if it comes will see Bajaj Auto's RE60 rolling out on Indian roads in 6-9 months time. Oscar Fernandes, the minister for road transport and highway had cleared the proposal in late 2013, after incorporating suggestions and objections from other OEMs. The proposal had moved to the law ministry.

People close to the development say, the "crossing of Ts and dotting of I's was done by the law ministry last week and if all goes well, the Ministry of Road Transport & Highways (MORTH) might come out with final notification in the next 15 to 30 days. The two key clause of the final notifications are likely to be that Quadricycles will only be allowed for commercial transportation purpose.

Bajaj Auto will be allowed to roll out RE60, six months from the date of final notification. This may give the competition a little more lead time to develop their Quadricycle. M&M has already confirmed to ET that the company has begun work on its own quadricycles and Piaggio too is watching the development closely. Rajiv Bajaj, MD, Bajaj Auto told ET, "We understand that the union law ministry has cleared the Quadricycles proposal. We have lost 2 years and lost 90% (because the vehicle can be used only for commercial use) of the market."

The final notification will lay down broader specifications of size & dimension, weight, power etc, but the MORTH will then give the responsibility to the testing agency ARAI or ICAT for the statutory order. In the statutory order, the testing agencies will come out with finer aspects of vehicle specification like the key parameters needed for safety, emission etc.

Post the framing of the statutory order , the vehicle will go through road tests under new rules. If it confirms to standards set by the testing agency, then the vehicle will be allowed to register under Union of India. Since it is meant for public transport, the quadricycle is likely to get separate permits just like the three wheelers and taxis to ply on roads from Regional Transport Offices of various state governments.

For the first time, a new category of vehicle has been created, since the framing of Central Motor Vehicle Act, respective state governments may have additional say on the category of the vehicle and on the number of vehicles allowed. West Bengal state government has already expressed interest to this new category of vehicles. Bajaj Auto is in the process of reaching out to various other state governments for selling the vehicle. Bajaj is upset with the protraction in clearance of the proposal and says the advantage of the first mover may not be there for long.

There was a division within the industry on creating this new category of vehicle, which Bajaj claimed was more to delay the framing of policy then blocking it. "M&M is definitely developing the vehicle, they have said so.

I have no doubt that Tata are also developing a quadricycle, their objective was to delay things so that they can catch up, it was not that they were opposing it. A week before his death, Karl (Slym) managing director of Tata Motors too had expressed his interest. I met Venu (Srinivasan), chairman and managing director of TVS Motor Company at the Expo, he did not say so, but I am sure TVS is working on it and so is Piaggio. I think they have all been working on it for two years, the lead which we thought we would get, we would not get now," added Bajaj.

Considered as the safer alternative to the three wheelers , Quadricycles will be allowed to ply only in cities as transport vehicles and not as a personal vehicle. The quadricycle, is a step-up from traditional auto rickshaws but significantly cheaper than a car because of its weight, power and speed. According to the specification known so far, the vehicle meant for carrying passengers has to be of 450 kg and for carrying goods should be of 550 kg.

The length will be 3 metre for passenger version and 3.7 metre for goods version. Quadricycles can carry a maximum of four passengers anda goods vehicles can carry 500 kg. Bajaj Auto's RE60 has a kerb weight of 450 kgs, emits 50 gms of carbon dioxide per kilometer and delivers high fuel efficiency of over 35-40 kilometers per litre.