Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsTechnologyAuto

This week in Auto: Coronavirus-hit China makes auto companies bleed; Hero lines up Rs 10,000cr war chest

Here is a look at all the major news in the auto space this week

February 22, 2020 / 12:05 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

The coronavirus (COVID-19) outbreak has exposed the risk of automakers' heavy dependence on China. As factories in China came to a standstill, manufacturing activities as far as Europe and the US were hit. We take a look at how much India, the world’s fifth-largest automaker, is impacted by the turn of events in China and where the country stands amid this crisis.

But first here is a look at all the major news in the auto space this week.

Automobile retail sales decline 5% in January

The Federation of Automobile Dealers Associations (FADA) on February 20 said passenger vehicle (PV) retail sales in January declined 4.61 per cent to 2,90,879 units as compared to the same month last year, hit by the tepid response by end customers.

According to the automobile dealers' body, which collected vehicle registration data from 1,223 out of the 1,432 regional transport offices (RTOs), PV sales stood at 3,04,929 units in January 2019.

COVID-19 to hit vehicle production

India's automotive industry is likely to bear the brunt of the recent outbreak of COVID-19 across China and neighbouring countries in South-East Asia.

The Indian auto industry is dependent on imports from China and also from countries that depend on Chinese companies for raw materials and the COVID-19 outbreak is set to have an adverse impact on the sector, ICRA said.

Bajaj sells more bikes outside India than at home

Bajaj Auto’s relentless focus on markets outside of India has helped the maker of Pulsar and KTM bikes to clock more sales in exports for two consecutive months.

The company sold more two-wheelers outside of India in January and December than in India during the two months

TVS leads the race in BS-VI switch

TVS Motor Company, the Chennai-based maker of Apache and Jupiter brand of two-wheelers, has taken the lead in switching over to Bharat Stage VI (BS-VI) even as rivals Hero Motocorp and Bajaj Auto continued to produce BS-IV models well into February.

TVS completely shut production of the soon-to-be outdated BS-IV models in January itself while introducing BS-VI upgrades including that of Jupiter, Apache, RR310 and XL (moped).

Hero lines up Rs 10,000 crore investments

Hero MotoCorp, India’s largest two-wheeler maker, has lined up an investment of Rs 10,000 crore over five-seven years towards new products, alternate mobility solutions and setting up of new manufacturing facilities.

The Delhi-based company’s announcements come at a time when the two-wheeler demand has been at its recent worst with sales falling nearly 16 percent during the April-January period

BS-VI shows Indian auto may no longer be as reliant on China as before

As India marches steadily to make its biggest shift ever in emission-related norms, neighbouring China, hit by the deadly virus, is battling a cut of up to 95 percent in automotive sales in February. Carmakers in China are launching new models online to avoid a public gathering at a physical event.

Daimler, one of the world's premier automotive groups warned of a direct business impact because of the COVID-19 outbreak in China. After the virus claimed over 2,000 lives, Tata Motors-owned Jaguar Land Rover said it has flown in auto parts from the crisis-hit nation in suitcases to keep production going at its UK-based factories.

But India has remained largely less impacted by the events. Indian companies who are busy making the switch to BS-VI from BS-IV have shown the way on how to be self-reliant.

So far no Indian automaker has raised a red flag over non-availability of components from China for shifting to Bharat Stage VI (BS-VI) emission norms. Multiple cars, SUV and two-wheeler models have been shifted to BS-VI standard successfully since the past 10-11 months and many more and due to debut well before March-end.

A couple of Indian companies, Hero Motocorp and Mahindra & Mahindra (M&M) warned about a possible impact in production due to non-availability of components from China. But this loss is for production of soon-to-be-outdated BS-IV models and not for the upcoming BS-VI.

BS-VI has pushed automakers to employ a greater degree of locally manufactured parts in their vehicles thereby making India much more self-sufficient than under BS-IV. Further, the basic customs duty on catalytic converters and parts used to make catalytic converters such as ceramic parts and compounds were raised by the government.

The level of auto components sourced from within India has significantly grown for BS-VI compared to BS-IV. For instance, German giant Volkswagen and Skoda have started with 95 percent localisation which will further grow to even beyond that next year.

New generation Tata Motors vehicles also have a very high degree of auto parts sourced from within the country. Maruti Suzuki and Hyundai are also pushing for more localised content by engaging its vendors more proactively than before.

This will discourage automakers in sourcing parts from outside of India boosting businesses for Indian vendors. India is also getting self-reliant in other spheres of automotive production too.

At least a couple of companies have confirmed plans to make battery cells, a key component going into the making of battery packs for electric vehicles (EVs), in India. China controls nearly three-fourths of the world's battery supplies at present.

The current generation of battery EV manufacturers such as Tata Motors, M&M, Bajaj Auto, TVS Motors, Ashok Leyland and a host of start-up companies import batteries from China directly or through a vendor.

Invite your friends and family to sign up for MC Tech 3, our daily newsletter that breaks down the biggest tech and startup stories of the day

Swaraj Baggonkar
Swaraj Baggonkar
first published: Feb 22, 2020 12:05 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347