The world’s biggest motorcycle and scooter trade show, the EICMA, kicked off in Milan earlier this week. Around 1,278 companies from 44 countries are participating in the annual event of which two companies are from India too.
Both these companies will not participate at the India Auto Expo next year. Our weekly news wrap delves into the details of why both these Indian companies rerouted financial resources to shows outside of India. But here is a complete round up of all the major auto stories of the week.
Mahindra, Eicher and Ashok Leyland announce Q2 figs
Mahindra and Mahindra (M&M + MVML) has reported 23.8 percent fall in its September quarter net profit at Rs 1,355 crore against Rs 1,778.8 crore in the a year-ago period.
India’s second-largest commercial vehicle maker Ashok Leyland, on November 8, reported a massive 92.6 percent year-on-year decline in its net profit at Rs Rs 38.9 crore for the second quarter that ended on September 30, 2019.
Eicher Motors posted an 18.5 percent year-on-year jump in its second quarter (July-September) net profit at Rs 570.5 crore. The company’s revenue fell 9.2 percent to Rs 2,181.9 crore.
Tata Motors writes-off car investments
Tata Motors, India’s fourth largest car maker, was forced to write-off Rs 230 crore in investments it made on passenger vehicle models and platforms during the recently concluded quarter.
The Mumbai-based company said that while a significant chunk of the margin decline during the second quarter had to be attributed to the worsening demand for trucks and buses, a portion of that dip was also due to write-offs.
Honda to nearly double premium bike line-up
Honda will launch five new models in the bike segment, with engine capacity over 300cc, to boost its presence in the mid-weight category as competition intensifies.
Over the next one-year, Honda Motorcycle and Scooter India (HMSI) will nearly double the number of models in the segment to 13. The new bikes will sport 300cc and above engines.
Suzuki to test electric scooter in India
Suzuki Motorcycle India has developed a prototype electric scooter , which it will start testing it in the country by 2020.
Despite wide expectations from the government to swiftly set up the charging infrastructure, the company will not wait for the ecosystem to be completed before starting work on their electric two-wheeler, a top Suzuki official told Moneycontrol
Suzuki Motorcycles puts the setting up of new factory on hold
Suzuki Motorcycle India has put on hold investments for a new factory due to the weak demand trend over the past several quarters and growing demand uncertainty over post-Bharat Stage VI (BS-VI) transition.
Instead of adding new capacity and risk underutilising it, the country’s fifth-largest two-wheeler maker will use its current Gurgaon-based plant for at least two more years.
Mercedes launches V Class at Rs 1.10 crore
German luxury car-maker, Mercedes- Benz, on November 7, rolled out its new multi-purpose vehicle V- Class Elite, thus expanding the product range in the premium automobile segment offered by the company.
The V-Class Elite, an upgraded version of V-Class Expression and V-Class Exclusive, would be built in Spain and sold in domestic market, Managing Director and CEO of the company Martin Schwenk said.
Chinese bus maker Beiqi Foton comes to India
PMI Electro Mobility Solutions (PEMSPL) said it plans to invest Rs 500 crore along with its Chinese partner Beiqi Foton Motor Co (Foton) for setting up an electric bus manufacturing plant in Pune in the next two to three years.
PEMSPL, which holds 70 percent in its joint venture with Beiqi Foton with the rest by the Chinese partner, also said it has entered into a pact with budget carrier SpiceJet to supply electric buses for its operations at Indira Gandhi International Airport.
Desi bike companies ditch Auto Expo but head to international shows
For the first time in several years, Hero Motocorp, the country’s largest two-wheeler maker, will not participate in the Indian Auto Expo due to be held in the first week of February of 2020.
Visitors will miss out on the concept models that the Delhi-based company showcases in every edition of the biennial show even though very few of them actually made it to the production lines set up in Haryana.
Hero reasoned that it cannot afford to fund its participation costs at the India Auto Expo while keeping in mind the financial challenges thrown in by the prolonged downturn in demand.
The year 2020 will also mark the third consecutive absence of Eicher Motors-controlled niche bike brand Royal Enfield from the India Auto Expo. The brand last participated in the mega event in 2014.
But both Hero Motocorp and Royal Enfield spared no expense at the more expensive EICMA (International Motorcycle and Accessories Exhibition) motor show held in Milan this week. EICMA is the world’s biggest, two-wheeler-focused trade show, offering 280,000 sq meter, even bigger than India Auto Expo with 185,000 sq meter space.
Together both companies displayed concept bikes and scooters some of which are planned to go into production while others were only for display to show the technological prowess that they have. Both companies were keen on making a noise at the world level and that is why financial resources had to be diverted.
When compared to the India Auto Expo on cost terms, EICMA is much ahead. The cost of owning a stall at the India Auto Expo is Rs 8,900/sqmtr. This cost balloon’s up to Euro 182,000/sq meter at EICMA. Compulsory registration fees of Euro 250,000 and insurance fee of Euro 100,000 are additional costs at EICMA.
Companies like Honda, Triumph, KTM, Harley-Davidson, Peugeot Motorcycle, BMW Motorrad, who are also not participating in the Auto Expo, had their massive stalls at EICMA. However, for these foreign brands, Europe is a huge market and they have specialized models that are not on sale in India.
With the exception of Turkey, Hero does not have any presence in the European market. The company is present in Latin America and Africa. Its blueprint of international expansion for the next few years does not feature Europe. Hero did showcase the Xtreme 1.R concept at the EICMA this week, which won’t go into production.
Royal Enfield, however, is rapidly expanding base in Europe. It has sales operations in several countries like the UK, Spain, Italy, Portugal, Germany to name a few. The maker of Continental GT, Himalayan and Classic ships fully built motorcycles from its factory in Chennai to these export markets. Royal Enfield even has a technology centre established in the UK.
Looking at these trends, should more Indian companies follow suit? Are the Bajaj Auto, TVS Motor and Mahindra & Mahindra company listening?Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.